Stock futures drop; dollar advances; oil declines: markets wrap

US and European stock futures dipped and the dollar advanced amid concerns about fresh localised lockdowns in response to stubborn outbreaks of the coronavirus.

Australia’s dollar erased gains and turned lower after the country’s Victoria state said it would shutter 10 areas in the metropolis of Melbourne. Earlier, the US state of Arizona ordered a number of establishments including gyms to close for 30 days. Treasuries were flat, while crude oil fell. Asian stocks had gained on improving economic data from the US to China.

Investors are weighing better economic figures against a continued increase in virus cases. Following a stronger-than-forecast US pending home sales figures Monday, China Tuesday reported improving purchasing-manager indexes for both manufacturing and services.

The MSCI All Country World Index is up about 18% this quarter, the biggest advance in 11 years — on the heels of the worst quarter since 2008. The rebound comes even as deaths from the virus surpass 500 000 and confirmed cases exceed 10 million, with the World Health Organisation warning the worst is yet to come.

“It’s not clear what trajectory coronavirus is heading,” Tom Lee, co-founder and head of research at Fundstrat Global Advisors, said on Bloomberg TV. “But I also think because we’re into quarter-end, there’s been some re-balancing. So I’m kind of in the camp that any weakness is short-lived. I would think July is going to be a strong month for stocks.”

Meanwhile, US Commerce Secretary Wilbur Ross said in a statement that regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, were suspended. Ross pointed to China’s imposition of new security measures on Hong Kong and risks surrounding US technology. China’s top legislative body unanimously voted to pass Hong Kong’s national security legislation, Now TV reported.

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