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European shares fall with U.S. futures; oil slips, gold gains
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EM currencies gauge sinks to lowest level since May 2017
Stocks deepened losses in Europe on Wednesday after a broad sell-off in Asia and enduring pressure in emerging markets intensified concerns ofcontagion. With investors seeing no let-up in trade tensions, the dollar strengthened for a fifth session and commodities slipped, led by oil.
With the Federal Reserve showing no signs of altering the path of monetary-tightening, investors are turning more cautious on fast-growing emerging markets. Turmoil in developing nations gripped traders’ attention, with some pondering whether the volatility will spill into developed markets. Inflation in the Philippines exceeded 6 percent for the first time in nine years, joining Turkey and Argentina as another developing economy with soaring prices.
“It has to get a lot worse before it gets better,” Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore, told Bloomberg Television. “Before people talk about structurally buying EM you need to get some kind of comfort on the end of U.S. dollar strength and the end of the Fed tightening and I still think that plays out for a lot longer.”
Elsewhere, gold climbed, while WTI oil futures dropped in the context of a strong dollar and a potential build at the Cushing, Oklahoma, storage hub. Bitcoin advanced for a fourth session, heading for its highest close in a month.
Terminal users can read more in our Bloomberg Markets Live blog here.
Here are some key events coming up this week:
- Executives from Facebook, Twitter and Google on Wednesday testify on social media, alleged Russia meddling.
- A key monthly U.S. employment report for August is due Friday.
These are the main moves in markets:
Stocks
- The Stoxx Europe 600 Index dipped 0.9 percent as of 10:36 a.m. London time, the lowest in 21 weeks on the largest decrease in three weeks.
- Futures on the S&P 500 Index dipped 0.4 percent to the lowest in more than a week.
- The U.K.’s FTSE 100 Index declined 0.5 percent to the lowest in almost 19 weeks.
- The MSCI Emerging Market Index dipped 1.5 percent, reaching the lowest in almost three weeks on its sixth straight decline and the biggest decrease in three weeks.
- The MSCI Asia Pacific Index sank 1.4 percent, hitting the lowest in almost three weeks with its fifth consecutive decline and the largest tumble in more than three weeks.
Currencies
- The Bloomberg Dollar Spot Index gained 0.2 percent, reaching the highest in almost three weeks on its fifth straight advance.
- The MSCI Emerging Markets Currency Index sank 0.4 percent to the lowest in 16 months.
- The euro dipped less than 0.05 percent to $1.1581, the weakest in almost two weeks.
- The British pound fell 0.2 percent to $1.2826, hitting the weakest in almost two weeks with its fifth consecutive decline.
- South Africa’s rand sank 1.5 percent to 15.5836 per dollar, the weakest in more than two years.
- The Turkish lira decreased 0.4 percent to 6.6957 per dollar, the weakest in more than three weeks.
Bonds
- The yield on 10-year Treasuries fell one basis point to 2.89 percent.
- The yield on two-year Treasuries declined one basis point to 2.64 percent.
- Germany’s 10-year yield increased less than one basis point to 0.36 percent, the highest in a week.
- Italy’s 10-year yield decreased seven basis points to 3.017 percent, the lowest in almost four weeks.
Commodities
- West Texas Intermediate crude dipped 1.2 percent to $69.02 a barrel, the lowest in more than a week on the biggest decrease in three weeks.
- Gold advanced 0.3 percent to $1,194.72 an ounce, the largest gain in a week.
- LME copper gained 0.6 percent to $5,850.50 per metric ton, the first advance in more than a week.
By Todd White – September 5, 2018, 7:51 PM GMT+10
— With assistance by Andreea Papuc, and Adam Haigh
Source: Bloomberg