(Bloomberg) — European stocks dropped with U.S. equity futures on Tuesday as a planned lockdown in Germany amid a resurgence of virus cases cast doubt on the global economic recovery.
The Stoxx 600 Index fell 0.5%, dragged lower by travel shares and cyclicals as Chancellor Angela Merkel put Germany into hard lockdown over Easter to try to defuse another wave of infections. The euro slipped and regional bonds advanced amid signs that progress against the pandemic is stalling as global deaths and cases creep higher.
The 10-year U.S. Treasury yield slid for a second day ahead of this week’s offerings, which include a seven-year note, a maturity that fared poorly in last month’s auction. The dollar strengthened.
Turmoil in Turkish assets continued in the wake of the central bank chief’s surprise dismissal over the weekend, with a drop in the main stock index triggering a circuit breaker.
While a fresh lockdown in Europe’s largest economy is putting investors on the back foot, the stabilization in bond yields is providing some relief against fears that heavy U.S. spending could reignite inflation and force tighter central-bank policy. All eyes turn to Washington later today, where Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell will speak on the pandemic response.
“The path for equity from here is likely to remain choppy, in particular for less cyclical and long duration equity, as further steepening of the U.S. yield curve driven by real rates can further weigh on equity valuation,” Goldman Sachs Group Inc. strategists led by Alessio Rizzi wrote in a note.
Elsewhere, WTI crude oil dropped below $60 a barrel on concerns about the near-term demand outlook.
These are some key events to watch this week:
Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell make their first joint appearance before the U.S. House Financial Services committee Tuesday.The U.S. Treasury holds auctions of two-, five- and seven-year debt.EIA crude oil inventory report on Wednesday.U.S. personal income and spending data on Friday.
These are some of the main moves in financial markets:
Stocks
Futures on the S&P 500 Index decreased 0.4% as of 6:16 a.m. New York time.The Stoxx Europe 600 Index dipped 0.5%.The MSCI Asia Pacific Index dipped 0.7%.The MSCI Emerging Market Index fell 0.7%.
Currencies
The Bloomberg Dollar Spot Index jumped 0.4%.The euro dipped 0.3% to $1.1892.The British pound dipped 0.6% to $1.3773.The onshore yuan weakened 0.1% to 6.513 per dollar.The Japanese yen strengthened 0.3% to 108.48 per dollar.
Bonds
The yield on 10-year Treasuries fell six basis points to 1.64%.The yield on two-year Treasuries dipped one basis point to 0.14%.Germany’s 10-year yield declined three basis points to -0.34%.Britain’s 10-year yield fell three basis points to 0.785%.Japan’s 10-year yield decreased less than one basis point to 0.082%.
Commodities
West Texas Intermediate crude dipped 3.4% to $59.32 a barrel.Brent crude declined 3.5% to $62.29 a barrel.Gold strengthened 0.2% to $1,740.33 an ounce.
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