The Monday Market Minute
- Global stocks retreat amid a torrent of risk-off news, with bank stocks sliding following a Buzzfeed-lead report on money laundering.
- U.S.-China tensions escalate as Beijing accuses Washington of meddling in its relations with Taiwan and bristles at the scrambled agreement to sell TikTok's U.S. assets to Oracle and Walmart.
- President Donald Trump's move to push ahead with a new Supreme Court Justice nominee likely snuffs out any chance of a stimulus agreement before the November election.
- Dallas Fed President Robert Kaplan says rates likely to remain near zero percent for the next 2.5 to 3 years.
- Britain warns that the country is days away from a fresh coronvirus lockdown as cases spike, while Europe struggles to contain a renewed wave of infections.
- U.S. equity futures suggest a notably softer open on Wall Street ahead of a series of Fed speakers, including Chairman Jerome Powell at 10:00 am Eastern time.
U.S. equity futures slumped lower Monday, while the dollar rallied and oil retreated sharply, as markets picked through a raft of risk-off headlines from the weekend while paring the chances of near-term stimulus from a Congress now divided by the nomination of a new Supreme Court Justice.
A weekend report from online news outlet Buzzfeed, based on public documents and in concert with a host of other media companies, alleged that several of the world's biggest banks have been facilitating the movement of illicit money for nearly two decades.
The report slammed European banks, with HSBC (HSBC) - Get Report and Standard Chartered falling to 20-year lows, while pressuring the shares of U.S. lenders such as JPMorgan Chase and Citigroup in pre-market trading.
U.S.-China tensions were also in focus following Beijing's anger with a visit by officials in Washington to Taiwan, as the two nations traded aggressive statements and scrambled fighter jets amid a tense weekend in the China Sea.
At home, the death of Supreme Court Justice Ruth Bader Ginsberg late Friday evening triggered sharp divisions between Republican and Democratic lawmakers over her potential replacement, with President Donald Trump and Senate Majority Leader Mitch McConnel vowing to push ahead with a nomination and a floor vote just weeks ahead of the November election.
With Democrats -- mindful of a similar situation in 2016 when McConnel refused to vote on a late-term appointment from President Barack Obama -- pushing back hard against the GOP, there appears now little if any chance of an agreement on new stimulus for the stalling U.S. economy.
Wall Street futures look set to reflect most, if not all, of those concerns Monday, with contracts tied to the Dow Jones Industrial Average suggesting a 565 point opening bell slide and those linked to the S&P 500 priced for a 56 point slump.
Nasdaq Composite futures, meanwhile, are indicating a 190 point retreat for the tech-focused benchmark as investors worry about reprisals from Beijing to the White House's complicated -- and at times contradictory -- broking of the sale of TikTok's U.S. assets to Oracle (ORCL) - Get Report and Walmart (WMT) - Get Report.
European stocks were similarly affected, with the region-wide Stoxx 600 falling 2.7% to a two-week low in Frankfurt, pulled down by slumping bank stocks and worries over a renewed surge in coronavirus infections in France and Spain.
In Britain, where Prime Minister Boris Johnson is warning citizens of a potential lockdown in the coming days, as coronavirus cases spike to nearly 8,000 per day, the FTSE 100 tumbled 3.2% in early London trading, slammed by a 6.2% fall in HSBC shares and weakness across the energy sector.
The U.S. dollar index gained around 0.45% against a basket of six global currencies to trade at 93.365 in overnight trading, as investors reached for safe-haven assets amid the chaotic weekend newsflow, while benchmark 10-year Treasury note yields held at 0.663%.
The dollar's gains pushed crude prices lower in early dealing, as well, snuffing out last week's rally that had taken U.S. oil prices into the low $40 dollar range following a five-day gain of around 10%.
WTI contracts for October delivery, the U.S. benchmark, traded 97 cents lower from their Friday close in New York at $40.14 per barrel in early European dealing while Brent contracts for November, the new global benchmark, were seen 94 cents lower at $42.19 per barrel.
Overnight in Asia, Japan's Nikkei 225 remained closed for a national holiday, although the yen continued trading at a multi-month high of 104.15 against the dollar in the safe-haven session.
The region-wide MSCI ex-Japan index, meanwhile, slumped 1.1% heading into the final hours of trading thanks in part to sharp retreats in Hong Kong and Taiwan.