(Bloomberg) --
U.S. equity futures reversed an advance and European stocks dropped as investors struggled to find their feet after the biggest plunge on Wall Street since 1987. Treasuries fell alongside the yen and gold.
Contracts on the S&P 500 and Nasdaq 100 indexes at one point rose by their daily limits after the biggest market loss since 1987, though they gave up the gains in the European morning. The Stoxx Europe 600 Index opened in the green after its lowest close in almost seven years, but it couldn’t hold the move and turned lower. Asia also saw a volatile session, with Australian equities posting their biggest jump since 1997 while benchmarks in Hong Kong and China saw more muted moves.
The yield on 10-Year Treasuries rose after plummeting almost a quarter percentage point Monday. The dollar strengthened against all its major counterparts except the South African rand.
American stocks slumped into the closing bell on Monday after President Donald Trump warned of a possible recession, with economic disruption from the coronavirus potentially extending into summer. In the latest attempts to stem the spread of the virus, Hong Kong was set to issue its second-highest travel alert for residents and extend quarantine measures for people coming from abroad. The Philippines became the first country to shut its financial markets, though it aims to reopen Thursday.
“A bear market does not preclude rallies,” said Eleanor Creagh, market strategist at Saxo Capital Markets. “In fact, the biggest rallies can be in bear markets -- erratic swings are exacerbated by the present high-volatility regime and strained liquidity conditions. With VIX remaining significantly above the long-term equilibrium, alarm bells are still sounding and traders should be wary of relief rallies.”
After the Federal Reserve and other central banks dramatically stepped up efforts to stabilize capital markets and liquidity, traders are looking to fiscal authorities for action. While Congress is still working on a package, New Zealand announced a NZ$12.1 billion ($7.3 billion) plan and Australia’s government is preparing to scale up just days after announcing a A$17.6 billion ($10.7 billion) initiative.
Here are the main moves in markets:
Stocks
- Futures on the S&P 500 Index decreased 0.5% as of 9:31 a.m. London time.
- The Stoxx Europe 600 Index dipped 2.3%.
- The MSCI Asia Pacific Index rose 0.1%.
- The Bloomberg Dollar Spot Index climbed 0.5%.
- The euro decreased 0.6% to $1.1111.
- The British pound dipped 0.7% to $1.2187.
- The Japanese yen declined 0.7% to 106.57 per dollar.
Bonds
- The yield on 10-year Treasuries climbed seven basis points to 0.79%.
- Germany’s 10-year yield rose three basis points to -0.43%.
- Britain’s 10-year yield gained 49 basis points to 0.493%.
Commodities