US and European equity-index futures dropped with Asian stocks and emerging-market currencies as concern global growth is faltering spurred investors to sell riskier assets.
Volkswagen shares were set to tumble after the company was found to have cheated on US pollution tests. Australian shares headed for their steepest decline in almost a month, while all 10 industry groups on the MSCI Asia Pacific excluding Japan Index fell.
US and European equity- index contracts signaled a third day of losses after Federal Reserve members over the weekend talked up prospects for a 2015 interest-rate increase. Volkswagen fell 10 per cent on the Tradegate alternative exchange. Zinc declined with New Zealand's dollar and emerging-market currencies. Japanese markets are closed through Wednesday.
“The key thing is that the markets are looking for global growth and we’re not seeing any,” said Raymond Chan, the chief investment officer for Asia Pacific at Allianz Global Investors. “It’s the US and China driving sentiment -- it’s pretty bad. I’d prefer if there was a US rate rise once and for all, and that would clear away all the uncertainty. Volatility is going to continue to exist for a long while.” Three Fed policy makers argued that higher borrowing costs are still warranted this year, commenting after the central bank decided to stand pat amid global financial-market volatility and concern about the impact of an economic slowdown in China.
European Central Bank officials are due to speak on Monday amid speculation policy makers there will add to stimulus to meet their inflation target. The MSCI Asia Pacific excluding Japan Index sank 2 per cent, the most in almost three weeks, by 7:15 a.m. London. Standard and Poor's 500 Index futures dropped 0.4 per cent, while those on the Euro Stoxx 50 index fell 0.3 per cent. The SandP/ASX 200 Index tumbled 2 per cent in Sydney, while the Hang Seng Index retreated 1.2 per cent and Seoul's Kospi gauge slid 1.6 per cent. The kiwi slipped 0.8 percent after consumer confidence dropped to a three-year low, while the Korean won and Malaysian ringgit weakened at least 1 per cent. Yields on German and US 10-year notes were little changed after sliding Friday, while rates on Australian and New Zealand 10-year debt dropped by at least three basis points. US oil was at $45.26 a barrel, while copper fell 0.3 per cent in London, extending Friday's 2.5 percent slump. Futures now give just a 20 percent chance of a rate increase at the Fed's October meeting, and 46 per cent probability of a move in December.
Greece
Greece's government bonds may extend their longest run of weekly gains in a year after the nation voted Alexis Tsipras and his Coalition of the Radical Left, or Syriza, into power for the second time in eight months. The nation's 10-year bonds climbed for the past four weeks, sending yields to a 2015 low, amid speculation that the outcome of the election would not derail Greece's international bailout. That's a contrast to the previous vote in January, which prompted a selloff in the securities after it first brought the anti-austerity Syriza party to power. Syriza, which took 35.5 per cent of the vote according to an official projection by the Interior Ministry.
Stocks
Futures on Germany’s DAX index slid 0.7 per cent. Volkswagen is set to tumble as the company faces fines that could total $18 billion and possible criminal charges for executives. The company was faulted by US authorities for outfittit of cash at this point in the cycle.”
Commodities
Major US equity indexes slipped more than 1 per cent Friday, as crude oil retreating back below $45 a barrel drove losses among energy stocks. West Texas Intermediate crude added 1.4 per cent Monday, after sinking 4.7 per cent on Friday amid ongoing concern over the global glut. Brent crude rose 1.2 per cent to $48.02 following a 3.3 per cent drop at the end of last week. Commercial petroleum stockpiles in Saudi Arabia, the world’s biggest crude exporter, increased to 320 million barrels, the highest since at least 2002, according to data Sunday on the website of the Riyadh-based Joint Organisations Data Initiative. Venezuela and Saudi Arabia agreed to restore stability in the oil market, Foreign Minister Delcy Rodriguez said on Twitter over the weekend.
Elsewhere in commodity markets, copper for three-month delivery dropped to $5,248 a metric ton, while nickel advanced 1.6 per cent. Other industrial metals declined, with zinc and lead falling at least 1.4 per cent. Gold for immediate delivery was little changed to $1,139.15 an ounce following a weekly advance of 2.8 per cent. Currencies The kiwi weakened to 63.54 US cents after a gauge of consumer confidence slid to the lowest since 2012 for the third quarter. The won slipped 1 per cent to 1,174.67 a dollar after rallying last week. The ringgit sank 1.2 per cent following Friday’s selloff in crude. Bloomberg’s Dollar Spot Index, which tracks the greenback against 10 major peers, was little changed at 1,200.72 after snapping a two-day drop on Friday to climb 0.7 per cent.
Bloomberg.
