Wall Street slumped Tuesday, suffering its first back-to-back loss since March. The NASDAQ tumbled -0.92%, with the Dow off -0.75%, while the S&P 500 slid -0.68%. Concerns over the rise in covid infections, especially in Europe, exacerbated worries the recovery will be slowed and that continued to spark profit-taking from recent record highs on the Dow and S&P 500. The WHO added to the virus threat as it warned over the rise in global cases to their highest levels of the pandemic.
Additionally, the U.S. State Department said the pandemic posed “unprecedented risks” and advised citizens to avoid visits to 80% of the countries around the world. Treasury yields dropped on renewed risk aversion flows. The 10-year rate fell over 4.8 bps to a low of 1.555%.
Key Market Movers
- U.S. data calendar has weekly MBA mortgage and oil inventory figures
- Canada calendar has BoC announcement and inflation data
- Dollar firmer after recent tumble; DXY index above yesterday’s highs
- Core EGB yields have lifted with Treasuries, stocks pared early gains
- UK Mar CPI lifted to 0.7%, CPIH reached 1.0%, PPI 5.9% y/y
European stock markets have pared early gains, and U.S. futures are fractionally higher, although sentiment seems to have stabilized somewhat during the European AM session. DAX and FTSE 100 were up 0.09% and 0.29% respectively as of 10:37GMT, the Euro Stoxx 50 was up 0.64%. Earnings reports provided some support, as did the prospect of sizeable fiscal stimulus from the EU going forward.
Confidence in the recovery also saw yields moving up from lows, however, and concern over a reduction in central bank support could limit the upside for stocks going forward. Netflix weighed on the NASDAQ future, which is currently down -0.2%, while S&P and Dow Jones have moved sideways after Wall Street closed with the second day of losses yesterday. Sentiment had also been depressed again during Asian hours.
Tokyo and Osaka will ask the Japanese government to declare a state of emergency and vaccine rollouts are also not going smoothly everywhere, while the sharp jump in new cases and associated deaths in India remains a major concern. Topix and Nikkei closed around 2% lower, the ASX corrected -0.3% and the Hang Seng was down -1.8% at the close, even as the CSI 300 managed a modest 0.3% gain.
Today’s focus will remain on earnings with reports from Verizon, NextEra Energy, Lam Research, Crown Castle, Canadian Pacific Railway, Las Vegas Sands, Ericsson, Chipotle, Kinder Morgan, Discovery Financial, Nasdaq, Rogers Communications, Baker Hughes, Halliburton, Graco, and Globe Life.
The economic calendar is thin again today, with just weekly MBA mortgage and oil inventory figures due. The Treasury auctions $24 bln of reopened 20-year bonds. In Canada, the BoC meets, with no change expected to its 0.25% overnight target rate.
