U.S. Futures Extend Slide While WTI Oil Crashes: Markets Wrap

By Sam Potter
April 20, 2020, 1:35 AM PDT Updated on April 20, 2020, 5:37 AM PDT

“Given that the policy focus from governments and central banks has been to support the corporate sector, we like investment grade credit,” says Generali Investment’s Vincent Chaigneau.

U.S. equity futures slid alongside European and Asian stocks on Monday as investors grappled with everything from the spread of the coronavirus to oil’s collapse and the next raft of corporate earnings. The dollar gained.

Contracts on the S&P 500 extended their decline through the European session as the drop in West Texas oil accelerated. A big part of that slump is because the May futures contract expires on Tuesday, but crude has been under immense pressure as demand disappears and a glut develops. The price cratered on Monday, taking it below $12 a barrel to the lowest level in well over two decades.

The Stoxx Europe 600 Index fluctuated before turning lower as energy companies slumped. Shares retreated across much of Asia, though the benchmark in Shanghai rose. The euro, pound and yen all weakened. European bonds dropped as Treasuries advanced.

Investors start the week weighing both the oil crash and signs that coronavirus infection rates may be slowing in several major economies, as well as preparing for the pace of earnings season to pick up. International Business Machines Corp., the Coca-Cola Co. and Netflix Inc. are among companies due to report in the coming days.

Governments and policy makers are continuing attempts to limit the economic damage of the pandemic. U.S. lawmakers are moving closer to a deal to top up funds for small businesses, China pledged more stimulus as banks lowered borrowing costs and European officials are discussing creating a bad bank for the region, according to the Financial Times.

These are the main moves in markets:

Stocks

• Futures on the S&P 500 Index dipped 2% as of 8:33 a.m. New York time.
• The Stoxx Europe 600 Index decreased 0.8%.
• The MSCI Asia Pacific Index fell 0.8%.

Currencies

• The Bloomberg Dollar Spot Index increased 0.4%.
• The euro fell 0.2% to $1.0858.
• The British pound declined 0.6% to $1.2428.
• The Japanese yen weakened 0.3% to 107.81 per dollar.

Bonds

• The yield on 10-year Treasuries dipped two basis points to 0.62%.
• Germany’s 10-year yield gained one basis point to -0.46%.
• Britain’s 10-year yield climbed two basis points to 0.322%.

Commodities

• West Texas Intermediate crude fell 36.2% to $11.65 a barrel.
• Gold strengthened 0.2% to $1,686.23 an ounce.

Source: Bloomberg
— With assistance by Andreea Papuc, James Thornhill, Adam Haigh, and Eddie van der Walt