European stocks advanced on Monday as positive economic data countered pessimism over a resurgence of Covid-19 cases. U.S. equity futures edged higher, while Treasuries slipped.
Gains in auto shares helped the Stoxx 600 Index erase an earlier drop after the euro area recorded its first manufacturing expansion in one-and-a-half years. HSBC Holdings Plc sank after missing profit estimates on the pandemic’s effect. S&P 500 Index futures also reversed a decline, with Microsoft Corp. rising in pre-market trading as it tries to salvage a deal for the U.S. operations of TikTok.
Risk appetite remains relatively measured as the coronavirus infection rate accelerates to a million cases every four days. Outbreaks are flaring in some U.S. states, the Philippines is reimposing a lockdown in Manila and reports indicate that a London-wide lockdown is being considered.
“There is going to be a recovery — we shouldn’t lose track of that as we go through this period,” Anne Anderson, head of fixed income at UBS Asset Management Australia, said on Bloomberg TV. “But returning to where we were before we started is going to be a real challenge and is going to require ongoing monetary and fiscal support. It’s a long way out of here.”
Tension between the U.S. and China emerged as another threat to risk appetite. The Trump administration will announce measures shortly against “a broad array” of Chinese-owned software deemed to pose national-security risks, U.S. Secretary of State Michael Pompeo said.
Even so, shares advanced in Japan and China, where mainland-listed technology stocks surged on expectations of support from Beijing in response to U.S. moves against Chinese-owned software companies.
Elsewhere, West Texas-grade oil edged below $40 a barrel as OPEC+ producers started supplying more crude to a global market where many countries are still struggling to contain the coronavirus.
Here are some key events coming up:
- Federal Reserve presidents speaking on the economy Monday: St. Louis Fed President James Bullard, Chicago Fed President Charles Evans and Richmond Fed President Tom Barkin.
- Australia interest rate decision due Tuesday.
- Reserve Bank of India and Bank of England rate decisions due Thursday.
- Dallas Fed President Robert Kaplan discusses the U.S. economy at Thursday event.
- July U.S. employment and jobs reports expected Friday.
These are some of the main moves in markets:
Stocks
- The Stoxx Europe 600 Index increased 0.7% as of 6:08 a.m. New York time.
- Futures on the S&P 500 Index increased 0.1%.
- The MSCI Asia Pacific Index gained 0.2%.
Currencies
- The Bloomberg Dollar Spot Index advanced 0.3%.
- The euro decreased 0.3%.
- The British pound decreased 0.3% to $1.3043.
- The Japanese yen was little changed at 105.79 per dollar.
Bonds
- The yield on 10-year Treasuries climbed two basis points to 0.55%.
- The yield on two-year Treasuries gained less than one basis point to 0.11%.
- Britain’s 10-year yield fell less than one basis point to 0.102%.
- Germany’s 10-year yield dipped less than one basis point to -0.53%.
Commodities
- West Texas Intermediate crude declined 1.3% to $39.76 a barrel.
- Gold weakened 0.2% to $1,971.17 an ounce.
- Iron ore climbed 4.2% to $113.60 per metric ton.
