U.S. Stock Futures Hit Limit Down; Treasuries Rise: Markets Wrap




 

(Bloomberg) -- U.S. equity futures tumbled at the start of trading Monday after a surge in the global death toll from the coronavirus and a failure as yet by Congress to agree on an aid plan. Treasury yields retreated.

S&P 500 futures dropped 5% and hit limit down after the index lost more than 4% on Friday. Australian equities tumbled more than 8% at one point, while stocks in Tokyo fluctuated at the open. The dollar climbed against major peers. New Zealand's dollar fell with the country's bond yields after its central bank joined other countries in saying it will start buying bonds to stimulate the economy. As investors attempt to assess the severity of the upcoming downturn, Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the virus.

Markets are "pricing a global recession, which we expect; stay defensive," Goldman Sachs Group Inc. strategists Kamakshya Trivedi and Zach Pandl, wrote in a note Sunday. "The uncertainties around the depth and duration of the hit to the global economy remain high and the momentum in our own, and other, economic forecasts continues to be sharply negative with downside risks."

Investors are grappling with a faster pace of coronavirus infections against flickers of optimism that have followed extraordinary government actions to protect the global economy, from plans for stimulus and cash handouts to nationalizing companies.

The New Zealand central bank said it will buy up to NZ$30 billion ($17 billion) of government bonds in the secondary market over the next 12 months. In the U.S., Democrats blocked the U.S. Senate from advancing a massive aid package as House Speaker Nancy Pelosi said the measure fell short of her goals.

Elsewhere, oil extended losses in Asia as prospects for a detente between OPEC and Texas oil producers appeared to dim.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index dropped 4.3% as of 9:15 a.m. in Tokyo. The gauge dropped 4.3% on Friday.Topix index rose 0.2%.Australia's S&P/ASX 200 Index tumbled 5.7%.Kospi index declined 6.1%.Hang Seng Index futures lost 3.6% on Friday.

Currencies

The yen rose 0.5% to 110.41 per dollar.The offshore yuan was at 7.1337 per dollar, down 0.2%.The kiwi declined 1.1% to 56.36 U.S. cents.The euro rose 0.1% to $1.0695.

Bonds

The yield on 10-year Treasuries fell 3 basis points to 0.81% after plunging 29 basis points on Friday.New Zealand's 10-year yield tumbled 50 basis points to 0.92% early Monday.The yield on 10-year Australian notes lost 12 basis points to 1.02%.

Commodities

West Texas Intermediate crude lost 3.1% to $21.86 a barrel.Gold slid 0.4% to $1,492.96 an ounce.

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