(Bloomberg) — U.S. equity futures edged lower after a sharp retreat yesterday, while global stocks slumped on worries that tougher virus restrictions will take an economic toll.
Contracts on the S&P 500 dipped after U.S. weekly jobless claims came in higher than forecast. In Europe, cyclical shares taking the brunt of the retreat. Norwegian Air Shuttle ASA plunged 12% after seeking protection from creditors. Germany’s Thyssenkrupp AG tumbled after saying it would slash 11,000 jobs amid a cash burn at its steel business. Nvidia Corp. dropped in U.S. pre-market trading after warning that data-center chip sales will decline.
The dollar index strengthened from a two-year low and Treasuries advanced. Gold dropped for a fourth day amid a drawdown in bullion-backed exchange-traded funds.
The bullish fever that lifted the MSCI World Index to an all-time high Monday is starting to soften, with virus cases surging in many parts of the world and public health facilities being pushed to the brink. New York City announced it will close schools and South Australia began one of the world’s toughest lockdowns, with even outdoor exercise and dog-walking banned. In Tokyo, the virus alert was raised to the highest levels as daily infections topped 500 for the first time.
It all means that investors are grappling with how long and how severe the pandemic will be in the months ahead. There’s plenty of economic stress now as businesses struggle under lockdowns, but scientists are also rapidly advancing several vaccine candidates to get life back to normal.
“We are expecting tough times in coming months because of the resurgence of cases, but in terms of the longer term recovery path, the vaccine was a very important news milestone,” Melda Mergen, the deputy global head of equities at Columbia Threadneedle Investments, said on Bloomberg TV. “We think that the cyclical recovery is going to come back but there are going to be some bumps along the road.”
In a report published Thursday, the IMF noted progress on a vaccine, but also said elevated asset prices point to a disconnect from the real economy and a potential threat to financial stability.
“While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars,” officials at the Washington-based fund said. “Uncertainty and risks are exceptionally high.”
In other markets, the MSCI Asia Pacific Index fell for the first time in 14 days, ending the longest winning run since 1988. Commodities dropped and Bitcoin steadied after surging past $18,000 on Wednesday.
Turkey’s lira strengthened after the country’s new central bank governor raised the benchmark interest rate.
Here are some events to watch out for this week:
Brexit talks look set to continue as the U.K. and EU approach the latest deadline.Bloomberg New Economy Forum virtually convenes global leaders to discuss trade, growing political populism, climate change, and the pandemic. Through Nov. 19.Data on U.S. weekly job claims and existing home sales for October are due Thursday.
These are the main moves in markets:
Futures on the S&P 500 Index fell 0.3% at 8:32 a.m. New York time.The Stoxx Europe 600 Index fell 0.6%.The MSCI Asia Pacific Index declined 0.5%.The MSCI Emerging Market Index dipped 0.9%.
The Bloomberg Dollar Spot Index climbed 0.2% to 1,151.69.The euro declined 0.2% to $1.1829.The British pound decreased 0.3% to $1.3236.The Japanese yen weakened 0.2% to 104.04 per dollar.
The yield on 10-year Treasuries decreased one basis point to 0.86%.Germany’s 10-year yield fell one basis point to -0.57%.Britain’s 10-year yield declined less than one basis point to 0.333%.
West Texas Intermediate crude was unchanged at $41.62 a barrelGold weakened 0.6% to $1,861.51 an ounce.
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