Stocks Tumble With U.S. Futures on Virus Fears: Markets Wrap

European stocks and U.S. futures tumbled as evidence of a second virus wave dashed hopes of a quick economic recovery. Treasuries and the dollar rose.

The Stoxx Europe 600 Index lost 2.2% at the market open and S&P 500 futures were down 3%. Treasuries rallied, pushing the 10-year yield to 0.65%. The dollar climbed along with the yen and European government bonds also advanced. BP Plc slumped after announcing it will write down the value of its business by as much as $17.5 billion and predicted the pandemic will be a long-term hit to energy demand.

“We’ve gone risk-off because the reality of the U-shape pick-up” is hitting home, David Bloom, global head of foreign-exchange strategy at HSBC Holdings Plc, said on Bloomberg TV. “It’s a U-shape pick-up, and it’s going to be slow and patchy” he said of the recovery.

Chinese economic data Monday showed the world’s second-largest economy had a smaller bounce back in May than economists had expected, with retail sales continuing to drop and industrial output rising less than forecast.

On the virus front, more than 20 U.S. states are seeing a pick-up in cases, Tokyo reported a jump over the weekend and a fresh outbreak in Beijing prompted officials to close a market there.

“The risk is that, globally, we get a second wave,” said Chris Iggo, the chief investment officer for core investments at AXA Investment Managers. “Now is the time to have that long-duration bond exposure in the portfolio.”

These are some key events coming up:

• Policy decisions from the Bank of Japan, Bank of England and the Swiss National Bank are due this week.
• China on Monday releases industrial production and retail sales data for May.
• CBOE plans to open its trading floor, which has been electronic only since March 16.
• Federal Reserve Chairman Jerome Powell delivers his semi-annual policy report to Congress.

These are some of the main moves in markets:

Stocks

• S&P 500 futures fell 2.2% as of 8:13 a.m. in London.
• Japan’s Topix index was down 2.5%.
• Hong Kong’s Hang Seng fell 2.2%.

Currencies

• The yen rose 0.2% to 107.22 per dollar.
• The euro was down 0.2% at $1.1236.
• The Bloomberg Dollar Spot Index rose 0.5%.

Bonds

• The yield on 10-year Treasuries fell about five basis points to 0.65%.

Commodities

• West Texas Intermediate crude dropped 4.5% to $34.65 a barrel.
• Gold was down 0.5% at $1,721 an ounce.

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