Futures mixed, Asia stocks drop on virus fears: markets wrap

Asian stocks dipped on Tuesday after US equities slid on concerns over coronavirus restrictions and prospects for economic stimulus. The dollar was steady after posting the biggest gain in three months.

Benchmarks fell in Australia and South Korea, while Hong Kong and China pared declines. S&P 500 futures fluctuated. Financials as a group were the second-biggest contributors to losses on the MSCI Asia Pacific ex Japan Index following a report about suspicious worldwide banking transactions.

After approaching the threshold that many investors consider to be a market correction, the S&P 500 index came off session lows on Monday. The Nasdaq 100 climbed. Japan is shut for a holiday and cash Treasuries won’t trade until the London open.

Investors have been rattled by the dimming outlook for further US fiscal stimulus, rising Covid-19 cases in a number of nations and predictions of market volatility around the presidential election. US-China tensions are also simmering, with doubts emerging over whether Oracle Corp.’s deal with TikTok will win US and Chinese government assent.

Federal Reserve Chairman Jerome Powell said the US economy is improving, but has a long way to go before a full recovery from the pandemic. He repeated earlier remarks that more is required from both fiscal and monetary policy to prevent the health crisis from causing long-term damage to the economy.

Yet prospects for another round of US government spending have retreated amid a partisan battle over replacing Supreme Court Justice Ruth Bader Ginsburg. Speaker Nancy Pelosi and House Democrats released a stopgap government funding bill without support from the White House or Senate Republicans.

“Valuations were getting more and more stretched and folks were looking the other way in the context of undeniable Fed support and the view that the US government was going to top off the loss of income during the pandemic,” Macro Risk Advisors Founder and Chief Executive Officer Dean Curnutt said on Bloomberg Television. “There is concern that this uncertainty around the election is going to stay with us for a period after the election.”

Oil steadied after its biggest decline in almost two weeks on mounting worries over prolonged coronavirus restrictions and supply concerns.

These are some events to watch this week:

• Powell appears before the House Select Subcommittee on the coronavirus to discuss the central bank’s response on Wednesday.
• New Zealand rate decision on Wednesday.
• US initial jobless claims are due Thursday.

These are some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 2:42 p.m. in Sydney. The S&P 500 dipped 1.2%.
• Australia’s S&P/ASX 200 Index fell 0.6%.
• South Korea’s Kospi index fell 2%.
• Hong Kong’s Hang Seng Index lost 0.3%.
• Shanghai Composite Index fell 0.1%.
• Euro Stoxx 50 futures rose 1%.

Currencies

• The yen was at 104.51 per dollar, up 0.1%.
• The offshore yuan traded at 6.7856 per dollar, up 0.1%.
• The Bloomberg Dollar Spot Index was flat after jumping 0.6%.
• The euro traded at $1.1768 after sinking 0.7%.

Bonds

• The yield on 10-year Treasuries dipped almost three basis points to 0.67% Monday.
• Australia’s 10-year bond yield was at 0.85%.

Commodities

• West Texas Intermediate crude rose 0.5% to $39.50 a barrel. It dropped 3.7% earlier.
• Gold was at $1,916.24 an ounce after depreciating 2%.