(Bloomberg) — European stocks fell to a three-week low, U.S. futures dropped and the Treasuries gained on the busiest earnings day of the season.
Markets are bracing for a slew of earnings from American tech giants and economic data that’s likely to show the biggest contraction U.S. gross domestic product in records dating back to the 1940s.
In U.S. pre-market trading, United Parcel Service Inc. jumped on a surge in delivery demand during the pandemic. Qualcomm Inc. rallied after giving a strong sales forecast. Eastman Kodak Co. extended yesterday’s 319% surge from winning a government loan to assist in the production of a coronavirus treatment.
Banks dragged the Stoxx Europe 600 Index lower, with Lloyds Banking Group Plc sliding as much as 9% after profit was wiped out by bad loans charges. Gold fell for the first time in 10 days. Two-year Treasury yields are two basis points away from falling below the record set in May.
All eyes today will be focused on reports from Apple Inc., Amazon.com Inc., Alphabet Inc. and Facebook Inc., which have an unprecedented level of influence in the U.S. stock market after investors bid up the companies during the pandemic-induced recession. Along with Microsoft Corp., they make up 22% of the S&P 500.
“Tonight could be a pivot for markets with four of the big tech companies reporting earnings,” said Berndt Maisch, a senior portfolio manager at Tresides Asset Management. “Their stocks are so super expensive and hence offer very little room for any disappointment. Should they miss the high expectations that could lead to a significant market shake up. We can already see that nervousness within European markets today.”
Also in the backdrop are ongoing worries about the health of the global economy as the pandemic rages in many U.S. states. In Germany, new coronavirus cases have spiked to the highest in about six weeks and data showed the economy plunged into a record slump in the second quarter.
“Markets are nearing their limits without further stimulus and a much stronger recovery,” said Andrew McCaffery, the global CIO of asset management at Fidelity International, citing the failure to get the outbreak under control in some countries. “The third quarter is likely to be much more challenging and markets could see renewed volatility.”
Here are some key events coming up:
Apple, Amazon.com, Alphabet report earnings Thursday; results from Chevron Corp. and Caterpillar Inc. are due Friday.U.S. second-quarter GDP is due on Thursday.China PMI data comes Friday.
These are some of the main moves in markets:
Futures on the S&P 500 Index declined 0.9% as of 6: 24 a.m. New York time.The Stoxx Europe 600 Index fell 1.3%.The MSCI Asia Pacific Index decreased 0.2%.The MSCI Emerging Market Index dipped 0.3%.
The Bloomberg Dollar Spot Index rose 0.2%.The euro sank 0.3% to $1.1758.The British pound was little changed at $1.2998.The Japanese yen weakened 0.2% to 105.10 per dollar.The offshore yuan weakened 0.1% to 7.0065 per dollar.
The yield on 10-year Treasuries declined one basis point to 0.56%.The yield on two-year Treasuries dipped one basis point to 0.12%.Germany’s 10-year yield sank four basis points to -0.54%.Britain’s 10-year yield fell three basis points to 0.093%.Japan’s 10-year yield decreased less than one basis point to 0.021%.
West Texas Intermediate crude declined 1.5% to $40.69 a barrel.Brent crude dipped 1.4% to $43.15 a barrel.Gold weakened 0.9% to $1,952.32 an ounce.
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