U.S. stock futures wavered Monday, suggesting another week of choppy trading amid concerns that rising coronavirus infections could delay the global economic recovery.
Futures tied to the Dow Jones Industrial Average wobbled between gains and losses before ticking up 0.3%. The gauge of blue-chip stocks shed 3.3% last week, putting it on track for a retreat this month.
The pan-continental Stoxx Europe 600 was mostly flat, while most major Asian equity benchmarks ended the day lower.
Over the weekend, coronavirus cases world-wide passed 10 million, with more than 500,000 deaths. Authorities in Florida, Texas, California and Arizona, which have accounted for much of the recent rise in U.S. cases, have imposed new restrictions and retreated on reopening plans.
“Markets are still wrestling between new cases, and extra liquidity” flowing into markets from central banks’ and government’s stimulus programs, said Edward Park, deputy chief investment officer at Brooks Macdonald. “At the end of last week, we saw the new cases winning out.”
A key measure of turbulence in U.S. stocks, the Cboe Volatility Index, edged higher for a second day, suggesting that investors will continue to be jittery.
“There’s still a high level of volatility, which shows that the degree of fear is still very elevated,” said Sebastien Galy, a macro strategist at Nordea Asset Management. “I think we’re in the last wave of this relief rally, caused by central banks doing their jobs and passing a lot of liquidity into the market.”
Large fund managers will also face pressure to rebalance their portfolios as the end of both the month and the quarter approaches, according to Steen Jakobsen, chief investment officer and chief economist at Saxo Bank. Asset managers are likely to try to lock in the sharp gains posted in U.S. stock markets in April and May, he said.
The yield on the 10-year U.S. Treasury note, seen as a haven, ticked up to 0.648%, from 0.636% Friday. Yields move in the opposite direction of bond prices.
In commodities, the main benchmark for U.S. crude oil prices fell 1.5% to $37.89 a barrel as the rise in coronavirus cases weighed on prospects for the global economic recovery. Brent crude, the international benchmark, dropped 1.4%.
“Markets are in retreat as the focus remains firmly on the virus, rather than anything that is happening to the global economy,” said Kit Juckes, a macro strategist at Société Générale. “That will keep fears of an even less V-shaped recovery being seen.”
In Asia, Hong Kong’s Hang Seng Index fell about 1%, while the Shanghai Composite pulled back 0.6%. Japan’s Nikkei 225 index declined around 2.3%.
Rising infections in U.S. states served “as a wild card for markets, which needs to be monitored carefully,” according to Eli Lee, head of investment strategy at Bank of Singapore. “A persistent rise in infection cases would form a major impediment to easing of containment measures and the momentum of the economic recovery.”
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