Alternative NewsContainment

Futures Tumble, European Stocks, Oil Plummet As Europe Imposes Partial Lockdowns

Futures Tumble, European Stocks, Oil Plummet As Europe
Imposes Partial Lockdowns 1

Futures Tumble, European Stocks, Oil Plummet As Europe Imposes
Partial Lockdowns Tyler Durden
Wed, 10/28/2020 – 07:56

U.S. futures continued their slump, hitting a three-week low as
shares in Europe and crude oil tumbled after tighter covid
restrictions in Germany and France sparked fear of even broader
lockdowns. European stocks dropped to a 5 month low with� all 20
sectors were in the red, while safe havens such as the dollar and
Treasuries rose. Oil and gold slipped, while Bitcoin surged to the
highest since January 2018. The VIX Index climbed to the highest
level since June, rising as high as 37 overnight.

With hopes for a new fiscal stimulus deal before the election
dead and buried and all attention shifting to covid, Wynn Resorts
and United Airlines Holdings, companies sensitive to restrictions,
dropped more than 1% in premarket trading. Energy firms such as
Occidental Petroleum Corp fell 2.8% on concerns over fuel demand.
Microsoft’s quarterly results smashed analysts targets,
benefiting from a pandemic-driven shift to working from home and
online learning. However, its shares fell 2% after rising 35% so
far this year after its sales forecasts in key units missed
estimates, overshadowing a revenue beat on cloud demand. The other
Big Tech companies – Apple, Alphabet, Amazon and Facebook – which
are due to report results on Thursday, fell between 0.9% and 1.6%.
GE jumped in early trading after posting a surprise profit and
positive industrial free cash flow.

Spiraling pandemic, elevated unemployment levels and U.S.
lawmakers failing to strike a deal on fresh fiscal stimulus before
the Nov. 3 election sent the S&P 500 and tech-heavy Nasdaq to
their lowest close in three weeks on Tuesday.

“We’ve been warning investors over the last few days
in particular to maybe pare back a little bit of their strong risk
Laura Fitzsimmons, JPMorgan Australia’s
executive director of macro sales, said on Bloomberg TV.
“As you see the odds start to wane a little bit more for
Biden, maybe that continues a bit more. We all remember four years
ago when markets were very much surprised.â€

Meanwhile, surging new cases and hospitalizations set records in
the U.S. Midwest, while in Europe, concerns over a national
lockdown in France hammered risk appetite. Overnight
Germany proposed closing bars and restaurants for a month,
while France reportedly favors a one-month lockdown from midnight
Turkey barred doctors and nurses from taking
leave, resigning or retiring.

Europe’s Stoxx 600 Index fell as much as 2.7%, before trimming
its decline to 2%. Earlier in the session, Asian stocks fared
better. The MSCI Asia Pacific Index was almost flat on Wednesday,
and markets in South Korea and Shanghai posted modest gains. In
China, indicators tracked by Bloomberg showed the recovery
continued to display mixed signals while remaining broadly steady
in October.

Price & Product Availability Tracker

Discover where products are available & compare prices

On the political front, Trump plans 11 rallies across 10 states
in the final 48 hours of campaign travel, CBS reported. The
president is also considering issuing an executive order requiring
an economic analysis of fracking as he tries to woo Pennsylvania
and Ohio.

China’s yuan depreciated as local banks abandoned inclusion of
a key factor used to calculate the currency’s fixing. The
offshore yuan weakened 0.1% to 6.7211 per dollar.

Futures Tumble, European Stocks, Oil Plummet As Europe
Imposes Partial Lockdowns 2

As reported yesterday, some banks stopped using the
counter-cyclical factor in their formulas for the fixing recently,
according to an official statement released Tuesday. The removal of
the factor, which was first introduced in 2017 to rein in
depreciation, suggests Beijing hopes to slow a rapid advance in the
currency since May. “The change could increase renminbi
volatility ahead,†Citigroup Inc. strategists led by Sun Lu wrote
in a note, using the yuan’s official name. “We think the
risk-reward for bullish offshore yuan exposure may start to look
attractive again†when the currency edges close to 6.75-6.80.

In rates, Treasuries extended this week’s gains with
yields as much as 1.5bp richer across 5- to 30-year sectors
as S&P futures touch fresh three-week lows.

Treasury 10-year yields around 0.753%, lagging bunds by ~1bp as
risk-off backdrop supports European fixed income; gilts also
slightly outperform. Bunds outperform with euro-area stocks
plunging almost 3% amid rising coronavirus infections and
toughening lockdowns. Auctions resume Wednesday with $55b 5-year
note sale.

In FX, the dollar rose with the yen and Treasuries, amid broad
based risk aversion. The Bloomberg Dollar Spot Index rose to its
highest level in more than one week and the Treasury curve
bull-flattened as a continued rise in coronavirus infections and an
approaching U.S. election boosted demand for havens. The
euro slipped to a session low of $1.1743, and was set for its
steepest three-day decline versus the dollar in five
as Europe’s governments prepared to tighten
restrictions due to the rising virus count, which may aslo fuel
more dovish rhetoric from the European Central Bank at Thursday’s
review. The yen advanced to a five-week high, and was the only
Group-of-10 currency to rise versus the dollar while Sweden’s
krona and Norway’s krone led losses among peers. The Australian
dollar gave up an Asia-session gain which followed a rebound in the
nation’s quarterly consumer prices.

Elsewhere, oil retreated back below $38 a barrel in New york
after an industry report pointed to a bigger-than-expected increase
in U.S. crude stockpiles. Brent plunged 4%, dropping below $40 for
the first time in a month on slowing global demand concerns.

Futures Tumble, European Stocks, Oil Plummet As Europe
Imposes Partial Lockdowns 3

Economic data include mortgage applications, wholesale
inventories. Visa, Mastercard and Amgen are among the highlights of
a busy earnings day. Earnings season continues, with Visa,
Mastercard, United Parcel Service, Amgen, Boeing, GlaxoSmithKline,
Ford Motor Company, General Electric and Nomura all reporting.

Market Snapshot

  • S&P 500 futures down 1.5% to 3,333.75
  • MXAP down 0.2% to 175.60
  • MXAPJ down 0.2% to 583.26
  • Nikkei down 0.3% to 23,418.51
  • Topix down 0.3% to 1,612.55
  • Hang Seng Index down 0.3% to 24,708.80
  • Shanghai Composite up 0.5% to 3,269.24
  • Sensex down 1.8% to 39,790.97
  • Australia S&P/ASX 200 up 0.1% to 6,057.74
  • Kospi up 0.6% to 2,345.26
  • STOXX Europe 600 down 2.6% to 343.47
  • German 10Y yield fell 2.1 bps to -0.636%
  • Euro down 0.4% to $1.1753
  • Brent Futures down 3.1% to $39.91/bbl
  • Italian 10Y yield fell 3.8 bps to 0.498%
  • Spanish 10Y yield rose 2.3 bps to 0.181%
  • Brent Futures down 3.1% to $39.91/bbl
  • Gold spot down 0.2% to $1,903.48
  • U.S. Dollar Index up 0.4% to 93.32

Top Overnight News from Bloomberg

  • German Chancellor Angela Merkel proposed closing bars and
    restaurants for a month and French President Emmanuel Macron
    prepared to announce tougher restrictions that may include a
    lockdown as hospitals fill up across Europe
  • As the European Union seeks to disburse funds from its 750
    billion-euro ($888 billion) recovery program as soon as next year,
    some of the countries hardest hit by the pandemic are struggling to
    work out how to best keep their finances in check once they take on
    billions of euros of new loans
  • Data due Thursday are forecast to show U.S. gross domestic
    product surged an annualized 32% in the third quarter, almost
    double the previous high. That figure will reflect activity
    switching back on across the country after Covid-19 fears and
    government stay-at-home orders ground the economy to a halt in
  • China’s economic recovery displayed mixed signals while
    remaining broadly steady in October, with small businesses turning
    more cautious and the property market weakening even as car sales
    soar. The aggregate index combining eight early indicators tracked
    by Bloomberg was unchanged from the previous month

A quick look at global markets courtesy of NewsSquawk

Asian equity markets lacked firm direction following the
mixed performance of stateside peers as earnings season and the
upcoming election provided a cautious setting, while US stock index
futures were further pressured after-hours on European shutdown
concerns after reports stated that France and Germany were both
mulling nationwide lockdowns
. ASX 200 (+0.1%) was
indecisive with initial declines due to underperformance in the
energy sector amid weaker oil prices and with financials also
subdued after ANZ Bank flagged a AUD 528mln hit to earnings,
although the losses in the index were eventually pared by ongoing
tech resilience. Nikkei 225 (-0.3%) and KOSPI (+0.6%) were varied
as participants reflected on quarterly results and with the BoJ
kickstarting its 2-day policy meeting where no major fireworks are
expected. Hang Seng (-0.3%) and Shanghai Comp. (+0.5%) conformed to
the choppy price action amid earnings and with Hong Kong resuming
the underperformance against the mainland, despite the continued
rally in tech heavyweight Tencent which extended on record highs
and flirted with the HKD 600 level after it having recently averted
a US WeChat ban. Finally, 10yr JGBs mildly extended above the
psychological 152.00 level as prices benefitted from the cautious
risk tone in Japan and following recent upside in T-notes, but with
gains capped as the BoJ began its 2-day policy meeting where the
central bank is widely expected to hold off from any policy

Top Asian News

  • The Pessimist’s Guide to Jack Ma’s Record-Breaking Ant
  • Bharti Airtel Jumps After 14 Million New Users Boost Sales
  • Korea Consumer Confidence Jumps Most Since 2009 as Virus
  • Nomura’s Overhaul Pays Off With Help From Traders,

European equities (Eurostoxx 50 -2.5%) trade with heavy
losses as the prospect of further lockdown restrictions in the
Europe triggers investor concern over the region’s recovery
In Germany, the DAX (-2.7%) is enduring
significant downside amid reports that German Chancellor Merkel is
pushing for tougher restrictions which would see the closure of
restaurants and bars and limit people’s movements until the end
of November. Losses for the index have also been exacerbated by
Beiersdorf (-6.2%) and BASF (-4.0%) post-earnings with the former
unable to reassure investors despite posting an encouraging
performance in Q3. Delivery Hero (+4.4%) are the only gainer in the
DAX after Q3 orders reached a new record, with the Co. also likely
to benefit from any restrictions that limit seated restaurant
bookings. CAC 40 (-2.7%) is also lagging its peers amid reports
that the French government may impose a month-long national
lockdown to combat the COVID pandemic which could take effect from
midnight on Thursday. From a sectoral standpoint, losses are
hitting some of the more cyclically exposed sectors hardest with
laggards comprising of autos, banking and oil & gas names. Of
note for the banking sector, Deutsche Bank (+1.9%) have seen
shallower losses than peers after posting a Q3 profit of EUR 128mln
(vs. a prior Y/Y loss of EUR 942mln) amid strong performance in its
investment banking division with the Co. also upgrading its FY20
revenue outlook. Elsewhere for the industry, Danske Bank (-1.1%)
raised its FY20 net profit outlook alongside Q3 earnings with the
Co. citing more favourable market conditions. In what has been a
particularly downbeat session thus far, bucking the trend are the
likes of Next (+4.4%), Carlsberg (+1.6%) and Morphosys (+0.8%)

Top European News

  • Aston Martin Soars After Securing Mercedes’s Help Out of
  • Novachuk, Kim Agree to Buy KAZ Minerals for 640
  • European Stocks Dive Again With More Lockdowns Piling Up
  • Johnson’s Unhappy Tories Fight Each Other Over U.K. Virus

In FX, the Buck has reclaimed its safe-haven
mantle and is firmer vs all G10 peers, bar the Yen amidst a severe
downturn in risk sentiment on heightened concerns about the
exponential 2nd coming of COVID-19 that is threatening to shutdown
several European economies, while forcing others to reimpose
stricter measures to combat the pandemic. The index has duly
rebounded above 93.000 after an agonisingly close test of
Monday’s low yesterday, and has registered a fresh w-t-d peak at
93.401 to expose half round number resistance at 93.500 that is
arguably only being protected by the fact that Usd/Jpy has
retreated further from recent highs and further towards 104.00.

  • AUD – Aside from the generally deteriorating tone, fractionally
    firmer than forecast q/q inflation in Q3 has partly countered more
    dovish overtones from the RBA to keep the Aussie afloat on the
    0.7100 handle, albeit some distance from 0.7150+ highs due to
    headwinds from weaker PBoC midpoint Cny fix without the
    counter-cyclical quotient (6.7195 vs 6.6989 previously).
  • GBP/NZD/CAD/EUR/CHF – Sterling has finally succumbed to what
    seemed like the inevitable as clearly substantial support and bids
    around the 1.3000 mark in Cable has yielded to a breach of DMAs
    sitting on top of 1.2990 stops that have now been triggered to a
    circa 1.2964 trough. Similarly, the Kiwi has relinquished 0.6700+
    status vs its US counterpart, while running into offers in Aud/Nzd
    ahead of 1.0600 and the Loonie has lost underlying support from
    crude prices as the clock ticks down to the BoC, as Usd/Cad
    rebounds from around 1.3178 to 1.3240. Elsewhere, the Euro is
    sub-1.1750 as the coronavirus cases mount, but could yet be drawn
    back to decent option expiry interest between 1.1750-60 (1 bn) and
    the Franc has fallen beneath 0.9100 following a near miss on
  • SCANDI/EM – No shock that the Nok is also tracking the
    reversal in oil and unwinding outperformance vs the Eur from
    10.8000+ at best this week so far to under 10.9000 again, but the
    Sek has gleaned some encouragement from relatively upbeat Swedish
    retail sales, in contrast to Norway’s much weaker than expected
    consumption, plus improvements in consumer and industrial
    sentiment, with Eur/Sek holding below 10.3500 and well away from
    very large expiries at 10.4000 (2.2 bn). Conversely, not even a
    rise in Turkish economic confidence to compliment an upturn in
    consumer morale or the CBRT flagging a V-shaped GDP rebound in Q3
    have rescued the Try from more pronounced depreciation as President
    Erdogan sticks to a tough line on defending its border with Syria.
    Hence, the Lira continues to sink and is now eyeing 8.3000 vs
    8.2920 at worst, so far.

In commodities, WTI and Brent front-month
futures succumbed to the early pressure in sentiment around the
European equity cash open (see equity section); fresh fundamental
drivers were lacking but the move was seemingly driven by
intensifying COVID-19 concerns with various areas considering/to
implement lockdowns. Alongside having a broad sentiment effect such
newsflow would have directly impacted crude prices given the
demand-side implications that further lockdowns would likely
entail. At present, WTI and Brent Dec’20 & Jan’21
respectively are posting losses in excess of 3% and are in
proximity to session lows with Hurricane Zeta unable to offset the
decline via its supply-side implications; particularly as a number
of rigs have indicated they will continue operations through the
storm. The most recent BSEE update showed just shy of 50% of oil
production shut-in for the Gulf of Mexico, with the survey
encapsulating a much more representative 38 companies compared to
the 7 in the initial report for Hurricane/Strom Zeta. Data wise,
the private inventories showed a build of 4.58mln last night and
expectations for today’s EIA’s are for a slightly more modest
build of 1.23mln. Moving to metals, spot gold is subdued this
morning in-spite of the risk tone as the metal succumbs to pressure
from the DXY which has continued to print highs throughout the
morning; at present, spot gold is in proximity to the USD 1900/oz

US Event Calendar

  • 8:30am: Advance Goods Trade Balance, est. $84.5b deficit, prior
    $82.9b deficit
  • 8:30am: Wholesale Inventories MoM, est. 0.4%, prior 0.4%
  • 8:30am: Retail Inventories MoM, est. 0.5%, prior 0.8%

DB’s Jim Reid concludes the overnight wrap

The pandemic has interfered with my once in every five year trip
to the theatre. We were going to see Hamilton this past weekend but
of course it was cancelled some time ago. However after buying a
subscription to Disney+ for the children we stumbled across their
exclusive film recording of the show over the last two nights (too
long for one sitting). I must admit for someone who doesn’t
really like musicals I was seriously impressed.

Given the mounting covid restrictions our family may be getting
good value out of our Disney+ subscription over the coming weeks.
France and Germany look set to move towards some form of
“lockdown lite†over the next 24-48 hours with more info likely
today and tomorrow. For France it was reported that this could be
based around a new one-month lockdown starting midnight on
Thursday, though it will be more flexible than the initial one from
last Spring. We’ll find out more tonight from President
Macron’s address to the nation. Meanwhile, German Chancellor
Merkel, according to reports out of Germany, is aiming for tough
restrictions of her own that will be released to Germany’s 16
state premiers at a meeting tomorrow. While schools and daycares
will remain open, restaurants will be shuttered and all major
events would be cancelled as of tomorrow if reports on Bloomberg
are correct. Germany’s Bild newspaper has confirmed this theme this
morning adding that Merkel wants to close fitness studios, casinos,
bars and cinemas with restaurants only offering take-outs.

So the virus news doesn’t get much better and I suppose the
problem with the second wave is that although we are far better
prepared than we were for the first wave the reality is that the
first wave occurred late in the traditional flu/cold/virus season.
The second wave still hasn’t even hit November or December yet
and we’re still seeing cases soar in many places.

More on the virus later but in terms of markets, US equities
moved between gains and losses most of yesterday before the S&P
500 settled down -0.30%. Technology stocks gained as chipmaker
Advanced Micro Devices announced a $35bn stock deal for competitor
Xilinx. The massive deal boosted sentiment across the industry and
saw tech (+0.52%) help lead the S&P, though the overall index
was not able to overcome losses in the Energy (-1.38%) and
Industrials (-2.18%) sectors. With the tech outperformance the
Nasdaq rose +0.64%, rebounding after Monday’s large losses. The
VIX rose just under one point to 33.25, its highest level since
September 3rd.

Asian markets are mixed this morning with the Shanghai Comp
(+0.36%) and Kospi (+0.30%) up while the Nikkei (-0.45%) and Hang
Seng (-0.18%) are down. Futures on the S&P 500 are also down
-0.56%. In FX, the US dollar index is up +0.18%. Elsewhere, WTI
crude oil prices are down -2.20% and Microsoft was down -1.74% in
after hours trading as forecast for revenue in some divisions fell
short of the highest analysts’ projections.

Earlier European equities gave ground for the second straight
day as worries over rising case numbers and the ensuing
restrictions continued to take hold. The STOXX 600 closed down
-0.95% to its lowest level since 29 May. The overall negative
sentiment bled through markets and pulled down European Banks
(-3.27%), even as HSBC rose +5% initially (+3.37% at the close)
after signaling it could resume dividends, while Spain’s
Santander initially rose +3.8% (-1.46% at the close) after beating
earnings expectations. Other bourses saw deeper loses with the IBEX
(-2.14%), CAC 40 (-1.77%), FTSE 100 (-1.09%), and FTSE MIB (-1.53%)
falling further.

The fading risk sentiment globally saw sovereign yields decline
once more. US 10yr Treasury yields came in -3.3bps while 10yr gilt
yields were down -4.3bps and bund yields down -3.5bps. There was a
slight amount of widening in peripheral spreads to bunds, except
for Italy where the possible passage of a €5bn fiscal stimulus
bill may have helped the spread of 10yr BTPs to bunds to tighten
(-0.4bps) slightly. Other havens were mixed, as the dollar ticked
slightly lower (-0.11%) and gold rallied +0.31% to $1908/oz.

With regards to the election this time next week we will be
waking up to the morning after the night before. It is not yet
clear that we will have a winner at this time as many State
Secretaries and voting commissions are hedging their bets that they
will indeed be able to project the winner by next Wednesday
morning. We are likely to have some states counted though,
particularly from those who are able to process and count mail in
ballots ahead of November 3. Former Vice President Biden remains
+9.1pts and +7.4pts ahead in the fivethirtyeight and
realclearpolitics polling averages respectively, while the
former’s model gives him an 88% chance of winning – the highest
yet – even if the poll lead has fallen from the recent peaks.
Florida is likely one state to pay close attention to next Tuesday
night as the state has experience with large numbers of mail
ballots, polls close fairly early in the night, and without that
state President Trump’s paths to victory dwindle precipitously.
Realclearpolitics has the race effectively tied in the state now,
with Mr Trump technically edging ahead for the first time by
+0.4pp, though fivethirtyeight, which weights polls on quality, has
Mr Biden up by +2.0pps.

Rising covid-19 cases continue to be in focus. Russia, which is
seeing record highs in newly confirmed cases and deaths in recent
days, is not expected to reintroduce new mobility restrictions.
However, as of today, mask-wearing will be mandatory in some public
places and the country may look to limit restaurant hours. Much of
Eastern Europe which largely missed the first wave is currently
seeing record numbers of weekly cases per 10k including the Czech
Republic (81.3), Romania (15.2), Hungary (14.1) and Bulgaria
(13.7). While testing has been a clear differentiator, the latter
three still trail the sharp rise seen in parts of Western Europe
that are seeing the virus for the second time including Belgium
(89.2), France (41.1), Netherlands (39.4), Switzerland (47.2) and
the UK (22.9). Meanwhile, France reported 530 fatalities yesterday,
the largest one day jump since April 22.

In the US, Covid-19 hospitisations are up at least 10% in the
last week in 32 states as the current case..

Read the Full Article

Alternative News, Containment

Prepare Now Before its too Late

Discover where products are available & compare prices

Sean Hannity: ‘Coronavirus Hysteria’ Is Attempt To ‘Demoralize’ Trump Voters
National Guard Responds As 1000s Of Looters Ransack Philly In 2nd Night Of Chaos; Reporter Brutalized By “BLM Rioters”

You might also like