U.S. equity futures slumped with European stocks on Monday, tracking a sell-off across Asia after China struck back in its trade dispute with America and let its currency weaken through a milestone level.
Treasuries led a global bond rally as investors dashed to safer assets.
S&P 500 Index futures slumped as much as 1.5%, while declines in mining, construction, and tech shares led the Stoxx Europe 600 lower.
China’s yuan weakened beyond 7 per dollar, a move that suggests the level is no longer a line in the sand for policy makers in Beijing.
- Equities took another leg down after Bloomberg reported the Asian nation has asked state purchasers to halt imports of American agricultural products.
- Hong Kong shares were hit hardest as protesters moved to shut down the financial hub in widening social unrest.
- Gold rallied and 10-year Treasury yields dropped to their lowest closing level since October 2016.
- European bonds advanced as data showed economic activity in the euro area’s private sector weakened ffurther
- hile the yield on 10-year U.K. gilts fell to a record low.
Yuan’s slide coincides with stocks, U.S. futures tumbling
all focus will now be on whether President Donald Trump responds to the Monday news about China’s exchange-rate.
If you see enough U.S. equity-market weakness, if you see enough downward momentum in economic data, then both sides may come back to the negotiating table at some stage.
But that’s going to happen at least in the near term.”
The yuan’s drop was the biggest since August 2015, when officials announced a surprise devaluation that roiled global markets. The People’s Bank of China said that it is able to keep the currency stable and at a reasonable level, and that the yuan broke above 7 per dollar because of trade protectionism.
- Elsewhere, West Texas oil dropped below $55 a barrel amid a sell-off in commodities.
- Iron ore futures in Singapore plunged the most in more than two years, to below $100 a ton.
- Bitcoin jumped more than 12%, climbing back above $11,000.
These are some key events to watch out for this week:
- Earnings from financial giants include: UniCredit, AIG, ABN Amro Bank, Standard Bank, Japan Post Bank.
- Five Asian central banks have rate decisions including India, Australia and New Zealand.
A string of Fed policy makers speak this week.
- Governor Lael Brainard is up first on Monday.
- followed by St. Louis chief James Bullard on Tuesday and Chicago’s Charles Evans a day later. All are Federal Open Market Committee voters.
Here are the main moves in markets:
- Futures on the S&P 500 Index declined 1.3% as of 6:32 a.m. New York time with its sixth straight decline.
- The Stoxx Europe 600 Index fell 1.8%.
- T he MSCI Asia Pacific Index sank 2.1%, headed for the largest tumble in more than nine months on a closing basis.
- H on Kong’s Hang Seng Index decreased by2.9% on the biggest dip in three months.
- Th e MSCI Emerging Market Index dipped 2.1% with its ninth consecutive decline.
- The Bloomberg Dollar Spot Index gained less than 0.05%.
- The British pound fell 0.by 2% to $1.2138.
- The euro advanced 0.4% to $1.1155 on the biggest gain in more than two weeks.
- Th e offshore yuan sank 1.5%.
- Th e Japanese yen increased by 0.5%.
- The yield on 10-year Treasuries sank eight basis points to 1.76% with its seventh straight decline.
- The yield on two-year Treasuries sank 10 basis points to 1.62%.
- Ja pan’s 10-year yield fell three basis points to -0.191%.
- Ge Germany’s 10-year yield declined two basis points to -0.52%.
- Br Britain’s 10-year yield decreased four basis points to 0.512% with its seventh straight decline.
- Gold gained 1.1%, the highest in more than six years.
- West Texas Intermediate crude fell 0.8% to $55.21 a barrel.
- Ir on ore sank 7.1% to $95.85 per metric ton on the biggest tumble in more than two years.