US futures slip with Europe stocks; oil steadies

Contracts on the S&P 500, Dow Jones, and Nasdaq all declined as the Stoxx Europe 600 Index slid. Telecom, retail, and construction were among the sectors leading that gauge down.

Nov 06, 2018 02:11 IST India Infoline News Service

Stock quotes and silhouette of a bear
A cautious mood took hold of global stock markets on Tuesday, as the US midterm elections got underway and investors braced for any fallout. American equity-index futures slipped alongside Treasury yields, European shares retreated and their Asian peers advanced.

Contracts on the S&P 500, Dow Jones, and Nasdaq all declined as the Stoxx Europe 600 Index slid. Telecom, retail, and construction were among the sectors leading that gauge down.

The mood in Asia had been more upbeat and equities climbed in Japan, Australia, South Korea, and Hong Kong, but underperformed in China even as the country’s vice president said Beijing remained ready to discuss a trade solution with Washington.

European government bonds were mixed and range-bound. The euro recovered from disappointing manufacturing data to gain, while the pound strengthened despite no apparent progress on Brexit negotiations. Gilts and British stocks both fell.

Politic events loom large for traders this week as US congressional elections, seen as a referendum on the policies of President Donald

Trump, take place Tuesday. Democrats are expected to take control of the House of Representatives but fall short in the Senate. Meanwhile, investors have one eye on the UK, where Theresa May is redoubling efforts to reach a Brexit deal.

“All eyes are on the US midterm elections today, which have resulted in a slight risk-friendly bias to markets, but a dearth of activity,” said Kit Juckes, the London-based global fixed-income strategist at Societe Generale SA. Expectations for policy gridlock are “the corner-stone of what feels like a consensual view that growth will slow,” he wrote in a note.

Elsewhere, WTI oil spent much of the European session heading for the seventh day of declines but pared the drop. Gold climbed. Markets in Singapore and Malaysia were closed for a holiday. Emerging-market stocks slipped and their currencies nudged higher.

Here are some key events coming up this week:

On Tuesday, US mid-term elections will determine whether Republicans keep control of Congress, and set the stage for Trump’s 2020 re-election bid
Federal Reserve policymakers are expected to leave the main interest rate unchanged Thursday at their penultimate gathering of 2018

These are the main moves in markets:

Stocks
  • Futures on the S&P 500 Index declined 0.2% as of 8:43 AM New York time.
  • The Stoxx Europe 600 Index dipped 0.5% to the lowest in a week on the biggest decrease in more than a week.
  • The MSCI All-Country World Index climbed 0.1%, hitting the highest in more than two weeks with its sixth consecutive advance.
  • The MSCI Emerging Market Index dipped 0.1%.

Currencies
  • The Bloomberg Dollar Spot Index declined 0.1% to the lowest in more than a week.
  • The euro advanced 0.2% to $1.1432, the strongest in two weeks.
  • The Japanese yen climbed less than 0.05% to 113.14 per dollar.
  • The British pound jumped 0.3% to $1.3082, the strongest in almost three weeks.
  • The MSCI Emerging Markets Currency Index increased 0.1%.

Bonds
  • The yield on 10-year Treasuries declined one basis point to 3.20%.
  • Germany’s 10-year yield fell less than one basis point to 0.42%, the largest fall in a week.
  • Britain’s 10-year yield gained three basis points to 1.533%, reaching the highest in more than two weeks on its seventh straight advance.
  • The spread of Italy’s 10-year bonds over Germany’s advanced eight basis points to 2.9785 percentage points.

Commodities
  • The Bloomberg Commodity Index decreased less than 0.05%.
  • West Texas Intermediate crude gained 0.1% to $63.16 a barrel, the first advance in more than a week.
  • LME copper dipped less than 0.05% to $6,190.00 per metric ton.
  • Gold advanced 0.2% to $1,234.09 an ounce, the highest in 16 weeks.

Source: Bloomberg

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