(Bloomberg) — Fear tightened its grip on global markets Friday, with European stock futures tumbling more than 4% and U.S. contracts signaling yet more pain after the biggest one-day rout on Wall Street since 2011. The yen climbed with sovereign bonds as traders sought shelter.
With the likes of Citigroup Inc. analysts saying they want to see markets “closer to panic” before going all-in on global equities, there was no appetite for dip-buying ahead of the weekend. In Asia, benchmarks from Tokyo and Seoul to Shanghai and Sydney saw declines of over 3%. Crude oil collapsed below $46 a barrel and U.S. and Australian 10-year yields hit fresh record lows. Russia’s ruble and Indonesia’s rupiah led emerging-currency declines.
Global shares are on course for the worst week since the 2008 crisis, down more than 10% from this month’s peak. That’s after California said it’s monitoring 8,400 people for signs of the virus after they had traveled to Asia, confirmed cases in South Korea topped 2,000 and Japan began shutting down schools.
“The markets are terrified that the disruption is going to hit GDP and then will hit profits at some stage,” Andrew Freris, chief executive of Ecognosis Advisory Co in London, told Bloomberg TV. “The only thing central banks can do is cut interest rates, and cutting interest rates isn’t going to do anything to restore the supply disruption in individual countries.”
The yen is on course for its biggest weekly gain since mid-2016. New Zealand’s dollar fell about 1% Friday as the country reported its first case of the virus and investors bet on policy easing from the central bank.
Downgrades to expectations for global growth keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year. Bank of America predicted that the global economy will see its weakest year since the financial crisis as the virus damages demand in China and beyond.
These are the main moves in markets:
S&P 500 futures fell 1.3% as of 7:08 a.m. in London. The S&P 500 Index lost 4.4% on Thursday.Euro Stoxx 50 futures slumped 4.1%.Japan’s Topix index lost 3.7% by the close.Hong Kong’s Hang Seng index slid 2.7%.The Shanghai Composite retreated 3.7%.South Korea’s Kospi index fell 3.3%.Australia’s S&P/ASX 200 Index declined 3.3%.
The yen rose 0.6% to 108.95 per dollar.The offshore yuan held steady at 7.0110 per dollar.The euro was little changed at $1.1003.The Aussie fell 0.6% to 65.29 U.S. cents.
The yield on 10-year Treasuries fell about four basis points to 1.22%.Australia’s 10-year yield fell four basis points to 0.82%.
West Texas Intermediate crude declined 3.3% to $45.57 a barrel.Gold fell 0.9% to $1,630 an ounce.
–With assistance from Jonathan Ferro, Eric Lam, Cormac Mullen and Joanna Ossinger.
To contact the editors responsible for this story: Christopher Anstey at [email protected], Ravil Shirodkar
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