Stocks Tumble After U.S. Futures Blindside Traders: Markets Wrap


(Bloomberg) — U.S. equity futures tumbled alongside stocks in Europe and Asia as the turmoil that’s bedeviled markets for months showed signs of renewed momentum.

Contracts on the S&P 500 fell by as much as 1.9 percent during the Asian session in a sudden and unexpected move that sent a shock wave across equity markets. In the latest in a series of ugly days, these were some of the stand out moves:

Contracts for the Dow Jones index were off more than 450 points; those for the Nasdaq fell 2.4 percentThe Stoxx Europe 600 tumbled 2.2 percent to the lowest in almost two yearsWest Texas crude plunged below $51 after Saudi Energy Minister Khalid Al-Falih said OPEC hasn’t yet reached a deal on production cutsTreasuries rose again as investors opted for safety, sending the benchmark yield to 2.89 percentThe MSCI Asia Pacific Index posted its worst day in six weeks

The precise catalyst for the futures sell-off was unclear, but Hong Kong shares slid 2.5 percent after the arrest of the chief financial officer of tech giant Huawei Technologies Co. — a move that threatens to reignite U.S.-China tensions. The yuan dropped the most since October.

“There are so many forces weighing against markets right now, whether it’s the China slowdown, weak European data, Fed hikes, uncertainty around trade and now Brexit as well,” Bilal Hafeez, head of fixed-income research for EMEA at Nomura, told Bloomberg TV. “We really need to see some stabilization in any of those factors to see markets stabilize now.”

Whether or not it triggered the slide, Canada’s arrest of Huawei’s CFO and reports it may extradite her to the U.S. are a blow to already fragile sentiment, just days after an apparent breakthrough on trade between America and China.

“This move against the Huawei CFO has just added another spanner in the works,” Eleanor Creagh, strategist at Saxo Capital Markets, told Bloomberg TV in Sydney. “It’s really illustrative of the fact that the trade truce we saw over the weekend between Trump and Xi doesn’t really do much to mend the underlying relationship between the U.S. and China that is still deteriorating.”

Elsewhere, Bank of Japan Governor Haruhiko Kuroda said economic risks from abroad could be severe, and the Federal Reserve’s Beige Book report showed fading optimism over growth prospects at U.S. firms even as most districts continued to report a modest expansion. The pound drifted as U.K. Prime Minister Theresa May searched for a compromise to avoid a crushing defeat on her Brexit deal in a key vote in Parliament next week.

Terminal subscribers can read our markets blog.

Some of the key events investors will be focused on this week:

OPEC ministers meet in Vienna Thursday. Friday brings the U.S. monthly employment report for November.China November trade data are due on Saturday.

And here are the main moves in markets:

Stocks

Futures on the S&P 500 Index fell 1.8 percent as of 10:48 a.m. London time, the lowest in almost two weeks.The Stoxx Europe 600 Index sank 2.2 percent to the lowest in two years on the biggest tumble in 10 months.The U.K.’s FTSE 100 Index sank 2.5 percent to the lowest in two years on the largest tumble in 10 months.Germany’s DAX Index decreased 2.3 percent to the lowest in two years on the biggest dip in more than five months.The MSCI Asia Pacific Index declined 1.8 percent to the lowest in almost two weeks on the largest drop in six weeks.The MSCI Emerging Market Index dipped 2.2 percent to the lowest in more than a week on the biggest decrease in more than six weeks.

Currencies

The Bloomberg Dollar Spot Index gained 0.2 percent to the highest in more than a week.The euro decreased 0.1 percent to $1.1329.The British pound fell 0.1 percent to $1.2727.The Japanese yen gained 0.4 percent to 112.76 per dollar, the strongest in more than two weeks.

Bonds

The yield on 10-year Treasuries fell two basis points to 2.89 percent, hitting the lowest in three months with its sixth straight decline.Germany’s 10-year yield dipped three basis points to 0.25 percent, the lowest in more than 17 months.Britain’s 10-year yield decreased three basis points to 1.284 percent.The spread of Italy’s 10-year bonds over Germany’s rose six basis points to 2.8455 percentage points.

Commodities

West Texas Intermediate crude fell 4.3 percent to $50.63 a barrel, the lowest in more than a week on the largest fall in almost two weeks.Gold fell 0.1 percent to $1,236.54 an ounce.

–With assistance from Adam Haigh and Matthew Miller.

To contact the reporter on this story: Samuel Potter in London at [email protected]

To contact the editors responsible for this story: Christopher Anstey at [email protected], Yakob Peterseil

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