(Bloomberg) — U.S. equity futures dropped after the first three-day rally in American equities since mid-February, while Asian shares advanced as investors take stock of strengthening stimulus efforts across the globe.
India’s bonds and stocks rose along with the rupee after the central bank slashed the benchmark rate by three quarters of a percentage point. S&P 500 futures dropped more than 1% after the index surged more than 6% Thursday. The dollar headed for its biggest weekly retreat since 2009, while Treasuries advanced. Australian stocks fell, while most other regional markets rallied.
The U.S. has now overtaken China for the most coronavirus cases worldwide, as infections in New York surged. China will temporarily suspend the entry of foreigners holding valid visas and residence permits starting Saturday as the country where the outbreak began battles to prevent the disease being bought back inside its borders from overseas.
The current rally “should struggle to keep on going since it is starting to get a lot worse in the U.S. on the virus front,” said Ed Moya, a maket strategist at Oanda Corp. “Concerns are growing that the virus spread is about to accelerate across the country.”
The speed of the rebound has caught some off guard. After falling into a bear market at the fastest rate ever, the S&P 500 just recorded its quickest three-day advance in nine decades. While some investors say equities are now in the process of forming a bottom, many expect renewed declines.
Meantime, data are beginning to show the extent of the economic damage of the outbreak — U.S. jobless claims surged to a record 3.28 million last week as businesses shut down to help prevent its spread. While the reading exceeded estimates, U.S. government aid may help to cushion the impact on workers and businesses. Federal Reserve Chairman Jerome Powell also sought to assure the public that the central bank wouldn’t run out of crisis-fighting ammunition.
“You’ve got this dynamic of how long will this last? And that we don’t know,” Priya Misra, global head of rates strategy at TD Securities, told Bloomberg TV. “The market is pricing in a fairly short duration of weakness” for the economy, she said. “A month from now when we realize we are still stuck at home and the data is not looking any better, that is when you can get a further downside move in yields.”
Elsewhere, European stock futures were about 1% lower. That follows moves higher on Thursday after the region’s central bank announced it will scrap limits on bond purchases for its emergency program, a landmark decision that gives it almost unlimited power to fight the economic fallout from the virus.
These are the main moves in markets:
Futures on the S&P 500 slid 1.8% as of 1:48 p.m. in Tokyo. The S&P 500 rose 6.2% on Thursday.Japan’s Topix Index rose 2.5%.The Shanghai Composite added 1.4%.Hong Kong’s Hang Seng rose 1.2%.Australia’s S&P/ASX 200 Index slid 3.7%.Kospi Index jumped 2.1%.Euro Stoxx 50 futures lost 1%.
The yen was at 108.44 per dollar, up 1%.The offshore yuan traded at 7.0756 per dollar, little changed.The euro bought $1.1065, up 0.3%.
The yield on 10-year Treasuries slipped four basis points to 0.80%.Australia’s 10-year yield was at 0.92%, down a basis point.
West Texas Intermediate crude rose 2.1% to $23.08 a barrel.Gold slipped 0.4% to $1,625 an ounce.
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