The Tuesday Market Minute

  • Global stocks slump amid a maelstrom of geopolitical risks, and slowing growht signals, with safe-have assets hitting fresh multi-year peaks.
  • Hong Kong protests continue into their 10th week, with calls for CEO Carrie Lam to resign intensifying as China grows impatient with the territory.
  • European stocks slide amid concern that the U.S. China trade dispute will hamper regional growth, while Italy's escalating political crisis looks to end with fresh elections in September.
  • Gold climbs to a new six-year high of $1,521.98 per ounce, while benchmark German 10-year bunds hit an all-time low of -0.613% in safe-haven flights
  • Wall Street futures suggests more opening bell declines Tuesday ahead consumer inflation data at 8:30 am Eastern time and earnings from Advanced Auto Parts and

Market Snapshot

U.S. equity futures extended declines Tuesday as global markets remain trapped in a maelstrom of geo-political risks and slowing economic growth signals, pushing safe-haven assets to multi-year highs and keeping risk investors sidelined following last night's sell-off on Wall Street.

Ongoing pro-democracy protests in Hong Kong, which have loped more than 6% from the Hang Seng index since late June, lurched into their tenth week Tuesday, pulling the benchmark to a seven-year low amid calls for the China-controlled territory's CEO, Carrie Lam, to resign. 

"My responsibility goes beyond this particular range of protest," Lam said during a televised news conference. "I, as the chief executive, will be responsible to rebuild the Hong Kong economy, to engage as widely as possible, listen as attentively as possible to my people's grievances and try to help Hong Kong to move on."

The prospect of Lam's departure, which could open the door for China's People's Liberation to enter the territory and declare some form of temporary rule, has investors in the region, and the rest of the world, on edge, with images of thousands of demonstrators occupying the city's busy international airport beamed to markets all over the world. 

Hong Kong's protests were paralleled yesterday by a troubling collapse in the Argentine Peso, which plunged some 30% against the U.S. dollar following the Sunday defeat of incumbent President Mauricio Macri, a business-friendly politician who has helped steady the nation's finances with help from the International Monetary Fund, was soundly defeated in an early Primary election.

In Europe, calls from a senior coalition government figure, Five Star's Matteo Salvini, to recall the Senate and plan for an October election, added to the region's woes, while the grimmest reading of investment conditions from the closely-watched ZEW survey since 2011 only compounded the risk-off sentiment.

Gold prices jumped to a fresh six-year high of $1,521.98 per ounce in overnight trade, while the safe-haven yen neared a seven month peak of 105.25 against the U.S. dollar. Benchmark 10-year German bund yields, a proxy for risk-free rates in the region, hit a new all-time low of -0.163% while 10-year Treasury notes slid to 1.63% and within touching distance of their recent October 2016 trough. 

U.S. stock futures look set to match the global market pessimism, with contracts tied to the Dow Jones Industrial Average indicating an 80 point decline and those linked to the S&P 500 suggesting an 8.1 point pullback for the broader benchmark.

Asia stocks, however, were clipped hard by both the Hong Kong protests, which trimmed 2.1% from the Hang Seng index and sent regional shares 1.32% lower heading into the final hours of trading. Japan's Nikkei 225 resumed trading after Monday's Mountain Day holiday and fell 1.11%, its biggest single-day decline in more than a week.

European shares were also heavy in the opening hours of trading, with the Stoxx 600 falling 0.75% in Frankfurt, lead by a 1% slide for the trade-sensitive DAX and a 0.43% decline for Italy's FTSE MIB benchmark, while Britain's FTSE 100 slid 0.65% despite the pound testing a fresh multi-year low against the greenback and trading at 1.2088.

Global oil prices were also softer from last night's close, but bullish sentiment on crude remains difficult to maintain following last week's reduction in demand forecasts from the International Energy Agency and a report Monday from the U.S. energy department that suggested shale production from the Permian Basin -- which will soon have a pipeline to the Gulf that will speed-up its international export -- will rise to a record 8.77 million barrels per day next month.

Brent crude contracts for October delivery, the global benchmark, were seen 40 cents lower from their Monday close and changing hands at $58.17 per barrel while WTI contracts for September, which are more tightly linked to U.S. gas prices, were marked 51 cents lower at $54.42 per barrel.