(Bloomberg) — European stocks climbed as analysts speculated the market could be relatively resilient as Asian and U.S. markets start pulling back. The pound weakened on concern the U.K. is inching closer to a no-deal Brexit.
The Europe Stoxx 600 opened higher on Monday with broad gains across industry groups. The dollar index strengthened, while oil extended a retreat below $40 a barrel after Saudi Arabia cut pricing. Treasury yields were little changed.
Stock futures pointed to further losses for American shares when markets re-open on Tuesday after the Labor Day holiday. Nasdaq futures slid 1.4% and contracts on the S&P 500 were down 0.6%. Valuation is emerging as a concern for U.S. investors and there’s also nervousness about extreme positions in technology stocks.
In Asian stock markets, trading was mixed. Shares dipped in Japan and China, while Australia and South Korea climbed. SoftBank Group Corp. shares slumped 7% after reports that the Japanese conglomerate made massive bets on options trades linked to U.S. tech stocks.
Global equities fell the most since June last week as doubt crept into investors minds about whether equities have risen too quickly and valuations are reaching extremes. U.S. technology shares, which have seen a powerful rally through the depths of the pandemic, showed signs of buckling at the end of the week amid reports that huge options bets were fanning their gains.
Nasdaq Futures Resume Declines With Valuation Angst Lingering
“I see this past week as more than just a short-run reversal,” said Jim McCormick, global head of desk strategy at NatWest Markets. “I think it is the start of an environment of lower asset returns and higher market volatility.” He added, “the bigger problem for risk assets is growth.”
In China, data on Monday continued to suggest a patchy recovery. Exports continued to expand in August as the country’s major trading partners gradually resumed business activities, though imports unexpectedly dropped.
Here are some key events coming up:
The next Brexit negotiating round begins with face-to-face discussions between the U.K. and the EU in London.The ECB will probably hold rates on Thursday but indicate that downside risks have intensified, suggesting further easing is possible before year-end.U.S. CPI data is due Friday, with consumer prices expected to rise in August for a third straight month.
These are the main moves in markets:
Stocks
Futures on the S&P 500 Index fell 1.8% as of 8:21 a.m. London time.The Stoxx Europe 600 Index decreased 0.5%.The MSCI Asia Pacific Index sank 1.7%.The MSCI Emerging Market Index dipped 1.3%.
Currencies
The Bloomberg Dollar Spot Index advanced 0.1%.The euro declined 0.1% to $1.1829.The British pound decreased 0.5% to $1.3209.The Japanese yen was little changed at 106.23 per dollar.The offshore yuan was little changed at 6.8357 per dollar.
Bonds
The yield on 10-year Treasuries jumped eight basis points to 0.72%.The yield on two-year Treasuries climbed two basis points to 0.14%.Germany’s 10-year yield increased three basis points to -0.46%.Britain’s 10-year yield gained four basis points to 0.273%.Japan’s 10-year yield climbed one basis point to 0.045%.
Commodities
West Texas Intermediate crude sank 5.1% to $39.18 a barrel.Brent crude sank 4.3% to $42.10 a barrel.Gold weakened 0.1% to $1,929.41 an ounce.
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