Asian Stocks Face Mixed Start to Week; Oil Drops: Markets Wrap

It was a sea of red across global equities on Monday, with European stocks and U.S. futures following a slump in Asia at the start of a crunch week for global trade. Political risks dragged the euro and pound down, and dollar strength roiled emerging assets.

More than 550 members of the Stoxx Europe 600 Index retreated, while futures on the S&P 500, Nasdaq and Dow dropped as benchmarks tumbled in Japan, China and South Korea. The euro came under pressure following
deepening tensions in Germany’s coalition government. Miners were the biggest losers in Europe as commodities slid, with West Texas oil falling below $74 a barrel after U.S. President Donald Trump called for
higher production.

Mexico’s peso reversed gains following the country’s
presidential elections. The yuan fell, resuming its sharpest drop since China’s August 2015 devaluation.

Trade-war
jitters, political risk in Europe and divergence in monetary policy across the world remain some of the key themes investors are grappling with following the end of the first half. In China, weaker-than-expected manufacturing data for June added to concern that the country’s growth is softening, while in Japan confidence among large manufacturers slipped during the second quarter.

“It’s not a happy start to the second half,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by email from Copenhagen. “Trade war concerns, U.S. sanctions, Trump’s rants and political problems in Europe, as well as worries about slowing emerging-market growth are all playing their part.”

Terminal users can read more in Bloomberg’s Markets Live blog.

These are key events coming up
this week:

• U.S. manufacturing probably continued to expand at a robust pace in June, economists forecast ahead of Monday’s release.
• The Reserve Bank of Australia has a policy decision Tuesday.
• The U.S. celebrates Independence Day on July 4, Wednesday. Stock and bond markets are closed, along with government offices.
• Federal Reserve releases minutes of its June 12-13 meeting, when FOMC policy makers raised the benchmark rate a quarter point for the second time this year, and lifted their median forecast to four total increases in 2018.
• U.S. payrolls are due Friday.
• Also on Friday, the U.S. is scheduled to impose tariffs on $34 billion of Chinese goods. Beijing has said it will slap tariffs on an equal value on U.S. exports including agricultural and auto exports.

Here are the main market moves:

Stocks

• The Stoxx Europe 600 Index fell 1.2 percent as of 8:31 a.m. London time, to the lowest in 12 weeks.
• Futures on the S&P 500 Index declined 0.7 percent to the lowest in almost five weeks.
• The MSCI All-Country World Index dipped 0.6 percent.
• The MSCI Emerging Market Index fell 1 percent.

Currencies

• The Bloomberg Dollar Spot Index gained 0.3 percent.
• The euro fell 0.4 percent to $1.1636.
• The British pound dipped 0.3 percent to $1.3168.

Bonds

• The yield on 10-year Treasuries fell three basis points to 2.83 percent.
• Germany’s 10-year yield dipped one basis point to 0.30 percent, the lowest in almost five weeks.
• Britain’s 10-year yield declined one basis point to 1.278 percent.

Commodities

• The Bloomberg Commodity Index fell 0.7 percent, the largest fall in a week.
• West Texas Intermediate crude declined 0.6 percent to $73.69 a barrel, the first retreat in a week.
• LME copper fell 0.6 percent to $6,583.50 per metric ton, the lowest in about seven months.
• Gold dipped 0.3 percent to $1,248.83 an ounce.

— With assistance by Kana Nishizawa, and Ksenia Galouchko