(Bloomberg) — European stocks dropped after President Donald Trump stoked tensions with China and virus cases across Germany and the U.K. continued to rise. Treasury yields fell and oil dropped to a two-month low.
Technology shares led losses in the Europe Stoxx 600 Index, while the FTSE 100 Index was buoyed by the weaker pound. EasyJet Plc shares slumped after the discount airline said flight demand is lower than expected. The dollar index and gold were little changed.
U.S. futures pointed to a weaker open after the long holiday weekend. S&P 500 contracts were little changed, while contracts on the Nasdaq 100 Index slipped 1.2%. Tesla Inc. shares dropped 7% in U.S. pre-market trading. The company was widely expected on Friday to be added to the S&P 500 Index, but wasn’t chosen for the U.S. stock benchmark.
Investors will be closely watching how tech shares react on Tuesday after last week’s selloff, which was driven by doubts over stretched valuations and reports that huge options positions have fanned a speculative fever. The U.S. and China relationship is also back in focus after President Donald Trump said he plans to end America’s reliance on the country.
Trump also threatened to punish any American companies that create jobs overseas, and to forbid those that do business in China from winning federal contracts.
Trump Vows to Sharply Scale Back U.S. Economic Ties With China
“The path of least resistance for the market may well be to test the downside,” said Peter Chatwell, head of multi-asset strategy at Mizuho International Plc. “Ultimately, if there is more selloff, I suspect real money investors will take the opportunity to buy the dip below Fridays levels.”
Royal Mail Plc, the privatized British postal service, surged 15% after saying it wants to overhaul its business and shift service to the parcels market.
Here are some key events coming up:
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 were little changed at 9:31 a.m. London time.The Stoxx Europe 600 Index advanced 0.8%.The MSCI Asia Pacific Index increased 0.1%.The MSCI Emerging Market Index declined 0.3%.
Currencies
The Bloomberg Dollar Spot Index gained 0.4%.The euro was unchanged at $1.1817.The British pound fell 0.3% to $1.3124.The Japanese yen was little changed at 106.26 per dollar.The offshore yuan was little changed at 6.8343 per dollar.
Bonds
The yield on 10-year Treasuries fell one basis point to 0.71%.The yield on two-year Treasuries dipped less than one basis point to 0.14%.Germany’s 10-year yield advanced one basis point to -0.46%.Britain’s 10-year yield sank two basis points to 0.244%.Japan’s 10-year yield decreased less than one basis point to 0.04%.
Commodities
West Texas Intermediate crude declined 2.8% to $38.42 a barrel.Brent crude dipped 2.3% to $41.38 a barrel.Gold weakened 0.2% to $1,929.11 an ounce.
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