U.S. stock futures slumped and Treasuries surged, signaling the May 14 relief rally will be short-lived, as fresh concern about the health of the global economy rattled investors still on edge over the trade war.
Contracts on the S&P 500 Index fell to session lows after American retail sales data missed estimates, adding to worry over growth after statistics showed China’s economy lost steam. Stocks on May 14 regained about 30% of their losses from the trade-fomented sell-off, but progress on a deal remained elusive. Tensions also mounted in the Middle East over U.S.-Iran relations, adding to demand for haven assets.
Treasuries surged, sending the two-year yield to the lowest level since February 2018, while the 10-year rate tumbled toward 2.36%. Oil retreated and gold rose. The Japanese yen and Swiss franc gained against the dollar.
Sustained appetite for risky assets is missing as investors remain on edge after a trade-induced roller coaster for markets. The White House is preparing duties on the remaining $300 billion of Chinese imports, and economists warn the new penalties eventually will weigh heavily on the American economy. President Donald Trump is preparing to meet Chinese counterpart Xi Jinping at next month’s G-20 summit, an encounter that could prove pivotal in the deepening clash over trade.
“Trade is far and away the more dominant story right now, but sales should not go unnoticed ahead of Consumer Confidence reads later this week,” said Mike Loewengart, vice president of investment strategy at E Trade Financial. “Many view retail as a key economic bellwether, and so weakness in the sector could give the bears more to sink their teeth into.”
Elsewhere, oil fell as an industry report signaling a jump in U.S. stockpiles eased concerns over a supply crunch, after a drone attack in Saudi Arabia had highlighted the vulnerability of the country’s energy infrastructure.
Upcoming notable events:
- Earnings this week include Cisco, Nvidia.
- Bank of Indonesia has an interest rate decision May 16.
- Australian unemployment is out May 16.
Main market moves:
- Futures on the S&P 500 Index sank 0.7% as of 8:59 a.m. New York time
- The Stoxx Europe 600 Index declined 0.5%.
- Germany’s DAX Index declined 0.9%.
- The MSCI Emerging Market Index fell 0.1%.
- The MSCI Asia Pacific Index advanced 0.5%, the biggest gain in six weeks.
- The Bloomberg Dollar Spot Index climbed 0.2%, the highest in almost three weeks.
- The euro fell 0.2% to $1.1184, the weakest in almost two weeks.
- The British pound dipped 0.4% to $1.2860, the weakest in almost three months.
- The Japanese yen gained 0.3% to 109.27 per dollar, the strongest in almost 15 weeks.
- The yield on 10-year Treasuries fell four basis points to 2.37%, the lowest in seven weeks.
- Germany’s 10-year yield dipped six basis points to -0.13%, the lowest in more than two years.
- Britain’s 10-year yield declined seven basis points to 1.034%, the lowest in six weeks.
- West Texas Intermediate crude dipped 1% to $61.11 a barrel.
- Gold advanced 0.3% to $1,300.10 an ounce.
With assistance from Charlotte Ryan and Vildana Hajric.