US futures drop, bonds up on second-wave worries

NEW YORK (BLOOMBERG) – US futures retreated along with Asian shares and the dollar climbed against major peers as investors gauged the danger of a second wave of coronavirus infections.

S&P 500 futures were down about 1.5 per cent. Stocks in Hong Kong saw the bulk of selling, with losses also in Australia, Japan and South Korea. Declines were pared after key Chinese data showed some signs of economic improvement.

More than 20 US 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. Second-wave concerns had pummelled shares on Thursday (June 11) before a modest rebound Friday. Crude oil prices slid, and Treasuries climbed.

“The risk is that, globally, we get a second wave,” said Mr 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.”

Key Chinese data on Monday showed signs of progress, albeit a bumpy path, as the world’s second-biggest economy recovers.

Retail sales and industrial output were marginally weaker than expectations in May, but still showed a pick up from the previous month. Officials moved a press briefing online due to the latest virus outbreak in Beijing.

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 1.3 per cent as of 12.15pm in Tokyo. The S&P 500 advanced 1.3 per cent on Friday.

Japan’s Topix index was down 0.1 per cent. Hong Kong’s Hang Seng fell 0.8 per cent. Kospi Index dropped 0.4 per cent. Shanghai Composite lost 0.2 per cent.

Australia’s S&P/ASX 200 Index, which tumbled almost 5 per cent the previous two sessions, was down 0.5 per cent. Euro Stoxx 50 futures retreated 0.7 per cent.

CURRENCIES

The yen edged up 0.2 per cent to 107.21 per dollar.

The offshore yuan slipped 0.1 per cent to 7.0860 per dollar.

The euro was at $1.1256.

The Bloomberg Dollar Spot Index rose 0.1 per cent.

BONDS

The yield on 10-year Treasuries fell about three basis points to 0.67 per cent.

Australia’s 10-year yield fell four basis points to 0.87 per cent.

Commodities West Texas Intermediate crude dropped 2.6 per cent to $35.31 a barrel.

Gold was at $1,729.65 an ounce, little changed.

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