Europe Stocks, U.S. Futures Pare Gains; Bonds Rise: Markets Wrap

(Bloomberg) -- European stocks pared early gains alongside U.S. index futures on Tuesday amid international efforts to curb the SARS-like virus from spreading. The yuan steadied and Treasuries turned higher.

The Stoxx Europe 600 Index erased an early advance, while contracts on the three main American equity indexes clung to moderate gains. Earlier in Asia, Japanese shares fell for a second day and equities slumped in South Korea as that market reopened after holidays. Trading is scheduled to resume in Hong Kong on Wednesday; the latest guidance from China, where the outbreak is still concentrated, is for markets to reopen on Monday.

The offshore yuan fluctuated after a sharp slide the previous day while the yen nudged higher for a sixth session. Crude oil declined. While China reported a further increase in both the death toll and number of infected people from the virus, its top securities regulator encouraged investors to evaluate the impact of the deadly coronavirus “rationally and objectively.´´

Investors are keeping an eye out for a slew of earnings due this week including from Apple Inc (NASDAQ:AAPL). on Tuesday while also monitoring the impact of the deadly coronavirus. Even as containment efforts intensify, the likelihood of the virus disrupting global businesses and the world’s second-largest economy appears to be growing.

“Risk appetite is unlikely to improve until we start getting news that the virus is under control,” DBS Group Holdings Ltd. strategists Philip Wee and Eugene Leow wrote in a note. “For now, the lack of positive news flow is likely to keep investors on the defensive.”

The outbreak shattered a calm in markets that hadn’t seen a 1% up-or-down move in the S&P 500 since early October. The latest surge in demand for havens also sent bond yields tumbling, with the global supply of notes with negative rates surpassing $13 trillion, to the highest since November.

Here are some events to watch out for this week:

• Earnings are due on Tuesday from Lockheed Martin (NYSE:LMT), United Technologies (NYSE:UTX) and Apple (NASDAQ:AAPL); Wednesday brings reports from GE, Boeing (NYSE:BA) and Facebook (NASDAQ:FB); Samsung Electronics (KS:005930), International Paper, Unilever (LON:ULVR) and Shell (LON:RDSa) report on Thursday, followed by South Korean chip maker SK Hynix, Chevron (NYSE:CVX), Caterpillar (NYSE:CAT) and Exxon Mobil (NYSE:XOM) all on Friday.
• Fed policy makers on Wednesday are expected to open 2020 the same way they closed 2019 -- by holding interest rates steady.
• Goldman Sachs (NYSE:GS) will hold its first-ever Investor Day on Wednesday.
• The BOE meeting is highly anticipated Thursday after a series of dovish comments raised speculation policy makers could lower interest rates.
• The U.S. reports fourth-quarter GDP Thursday.
• The U.K. is scheduled to leave the European Union Friday.

These are some of the main moves in markets:

Stocks

• The Stoxx Europe 600 Index was little changed at 9:10 a.m. London time.
• Futures on the S&P 500 Index jumped 0.3%.
• South Korea’s Kospi index sank 3.1%.
• The MSCI Emerging Market Index dipped 0.7%.

Currencies

• The Bloomberg Dollar Spot Index was little changed.
• The British pound decreased 0.4% to $1.3011.
• The euro was unchanged at $1.1019.
• The Japanese yen strengthened 0.1% to 108.83 per dollar.
• The offshore yuan appreciated 0.1% to 6.9821 per dollar.

Bonds

• The yield on 10-year Treasuries dipped three basis points to 1.58%.
• Germany’s 10-year yield decreased one basis point to -0.40%.
• Britain’s 10-year yield fell one basis point to 0.499%.

Commodities

• The Bloomberg Commodity Index decreased 0.3% to 76.02.
• Gold weakened 0.1% to $1,581.02 an ounce.
• West Texas Intermediate crude dipped 0.7% to $52.78 a barrel.