US stock futures drop as virus spreads; yen up

US stock futures drop as virus spreads; yen up
-A +A

SYDNEY (Feb 10): U.S. stock futures fell while haven assets nudged higher at the start of a week that may prove crucial in determining the trajectory of coronavirus cases, and in turn the prospects for a v-shaped economic recovery.

With cases outside of China continuing to increase, investors will be monitoring whether the rate of change kicks up a gear. Futures on the S&P 500 Index declined about 0.5%, while Treasury futures climbed along with the yen and gold.

Australia’s shares retreated and its bond yields fell. The yuan traded weaker than 7 per dollar offshore. Oil fell. On Friday, U.S. shares and Treasury yields fell Friday even after a strong monthly jobs report.

As investors grapple with assessing the impact of the virus on global growth, China’s central bank on Monday will offer its first batch of special re-lending funds as it seeks to combat the outbreak. Companies have limited their operations in China and the Nikkei newspaper reported Hon Hai Precision Indistry Co., Apple Inc.’s main iPhone production partner, dropped plans to resume production after Chinese authorities intervened.

“Perhaps more worrying for global markets is the increasing number of coronavirus cases outside of China and Asia,” said Simon Ballard, chief economist and strategist at First Abu Dhabi Bank. At the same time, “the continued assumption for a ‘low for longer’ rates environment is helping underpin the bid for risk,” he said.

Here are some key events coming up:
* China inflation data comes Monday. Producer prices probably were flat in January from a year ago, according to forecasts, after six months of declines.

* Earnings season continues with reports including: Alibaba, Softbank, Nissan, Airbus, Nestle and AIG.

* Federal Reserve Chairman Jerome Powell delivers his semiannual testimony in Congress on Tuesday and Wednesday.

* Thursday brings a gauge of underlying U.S. inflation, the core consumer price index. It’s expected to increase to 0.2% in January, a faster pace than in December.

* China and the U.S. on Friday lower tariffs on billions of dollars of respective imports, as part of the trade deal signed last month.

And these are the main moves in markets:

Stocks

* Futures on the S&P 500 lost 0.5% as of 8:38 a.m. in Tokyo. The underlying gauge fell 0.5% on Friday.

* Futures on Japan’s Nikkei 225 dropped 0.5%.

* Hang Seng Index futures retreated 1.1% on Friday.

* Australia’s S&P/ASX 200 Index slid 0.5%.

Currencies

* The yen rose 0.2% to 109.58 per dollar.

* The offshore yuan slid 0.1% to 7.0122 per dollar.

* The euro bought $1.0948, little changed.

Bonds

* The yield on 10-year Treasuries fell six basis points to 1.58% on Friday. Futures were up 0.1%.

* Australia’s 10-year yield declined seven basis points to 0.97%
early Monday.

Commodities

* West Texas Intermediate crude oil fell 1.2% to $49.74 a barrel.

* Gold rose 0.2% to $1,573.73 an ounce.