The Monday Market Minute
- Global stocks slump as coronavirus infection rates hit new records in Europe and the United States.
- U.S. infections surge over the weekend as northern states look to a second wave heading into cooler year-end weather.
- Spain declares a state of emergency, and Italy triggers new restrictions on bars, restaurants and schools as European infections top 250,000.
- Multiple reports suggest AstraZeneca's developing vaccine has triggered immune responses in trial participants.
- US markets prep for the busiest week of the earnings season, with 180 companies set to report, including Apple, Amazon and Google.
- Wall Street futures suggest a firmer ahead of earnings from Hasbro and September new home sales data at 10:00 am Eastern time.
U.S. equity futures slumped lower Monday, while the dollar leads a rally of safe-haven assets around the world, as markets reacted to record coronavirus infection rates in Europe and the United States and faded bets on near-term stimulus from Washington.
The U.S. recorded record rates of new infections for two consecutive days over the weekend, lifting the overall total past 8.7 million as the second wave continues to gather strength amid colder weather in the north and northeastern parts of the country.
In Europe, Spain has issued a new state of emergency, while Italy has intensified lockdown restrictions as infection rates around the region climb and fatalities pass 250,000.
Some positive news from AstraZeneca (AZN) - Get Report, which is developing a coronavirus vaccine alongside researchers from Oxford University, provided some downside relief, with multiple reports suggesting their study has produced immune responses in both young and older patients.
However, with little prospect of a near-term agreement on stimulus in the United States -- with the November 3 Presidential election now just a week away -- risk appetite is in short supply Monday as the dollar jumped 0.3% against its global peers and 10-year Treasury bond yields rallied 8 basis points to 0.809%.
Futures contracts tied to the Dow Jones Industrial Average suggesting a 350 point opening bell decline for the benchmark, which is still up 2% for the month but slipped into negative territory for the year last week.
Contracts tied to the broader S&P 500 are priced for a 41 point decline and those linked to the tech-focused Nasdaq are indicating a 120 point pullback heading into the busiest week of the corporate earnings season.
Around 180 S&P 500 companies will report over the next five days, including Apple (AAPL) - Get Report, Amazon (AMZN) - Get Report and Google (GOOGL) - Get Report on Thursday, as corporate profit outlooks continue to improve.
Refinitiv data suggests third-quarter earnings will fall 16.7% from last year to a share-weighted total of 287.8 billion, before contracting by around 12.4% over the final three months of the year. So far, however, with 135 companies reporting, 83.7% have beaten Street forecasts, well ahead of the typical pace of around 70%.
Global oil prices also reflected the current market pessimism, with crude tumbling as much as 3% in overnight trading on renewed concerns for energy demand in a second wave pandemic.
WTI contracts for December delivery, the new U.S. benchmark, traded 80 cents lower from their Friday close in New York and were changing hands at $39.05 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen 79 cents lower at $40.98 per barrel.
European stocks were also weaker in the opening hours of trading, with the Stoxx 600 falling 0.5% and Germany's DAX index slumping nearly 2% after software group SAP SE (SAP) - Get Report scrapped its near-term forecasts, sending shares in Europe's second-largest tech company down nearly 20%.
Overnight in Asia, Japan's Nikkei 225 kicked off the week with a 0.09% decline as the yen edged higher to 104.89 against the dollar, while the region-wide MSCI ex-Japan benchmark fell 0.18% heading into the final hours of trading.