European stocks turned lower and U.S. equity futures edged higher as the risk-on mood that kicked off the week showed signs of easing. Oil prices rose for a fourth straight session.
The Stoxx Europe 600 opened in the green on news that Germany and France have backed a$546 billion, European Union-wide economic recovery fund. But it struggled to keep the momentum after strong gains on Monday. Contracts for the S&P 500 pointed to a firm open, but they came off their session highs. The advance for equities was stronger in Asia, with gains of almost 2% for the regional gauge.
European government bonds mostly climbed, with peripheral yields falling the most on the recovery fund news. Treasury yields pulled back from five-week highs. Sterling rallied after the U.K. announced plans for 30 billion pounds ($37 billion) in tariff cuts after Brexit. West Texas crude’s ascent kept it above $30 a barrel, though it stayed off highs touched in Asian trade.
Riskier assets kicked off the week with big gains after Moderna Inc. fueled hopes for a coronavirus vaccine, but investors are struggling to maintain the momentum as they monitor the increasing number of economies easing the restrictions put in place to slow the spread of the pandemic. Federal Reserve Chairman Jerome Powell is scheduled to speak on the state of the recovery Tuesday, amid expectations he’ll press for further fiscal support to address one of the steepest downturns since the Depression.
“Short-lived bounces in stock prices even while markets establish new lows are not unheard of,” Ashwin Alankar, head of global asset allocation at Janus Henderson, said in a note. “Forward-looking metrics such as earnings revisions and options prices, on the other hand, sound a more cautious tone both for the economy and stock prices.”
Headwinds remain for stocks, not least a deteriorating U.S.-China relationship. In a further sign of tightening scrutiny on capital flows to China, Nasdaq is set tounveil new rules for initial public offerings including tougher accounting standards that will make it more difficult for some Chinese companies to list on the exchange. That follows moves in Washington to halt investments by a retirement plan into the stocks of Chinese firms.
These are some of the main moves in markets:
- Futures on the S&P 500 Index advanced 0.3% as of 8:49 a.m. London time.
- The Stoxx Europe 600 Index decreased 0.3%.
- The MSCI Asia Pacific Index advanced 1.9%.
- The Bloomberg Dollar Spot Index decreased 0.2%.
- The euro increased 0.3% to $1.0941.
- The British pound gained 0.4% to $1.2245.
- The Japanese yen weakened 0.1% to 107.41 per dollar.
- The yield on 10-year Treasuries dipped two basis points to 0.71%.
- Germany’s 10-year yield fell one basis point to -0.48%.
- Britain’s 10-year yield decreased two basis points to 0.239%.
- West Texas Intermediate crude increased 3.1% to $32.81 a barrel.
- Gold strengthened 0.1% to $1,733.50 an ounce.
— With assistance by Sophie Caronello, and Andreea Papuc
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