U.S. Futures Slip; Asia Stocks Set for Muted Open: Markets Wrap

(Bloomberg) -- U.S. equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asia stocks looked set for a muted open.

S&P 500 contracts retreated while those in Japan were little changed. Australian shares opened flat. U.S. House Speaker Nancy Pelosi said the chamber could pass a pandemic relief plan this week, though a deal with the White House remains elusive as chances faded of a resolution before next week’s election. The pound ticked higher after trade talks between the U.K. and the European Union were extended to Oct. 28. Hong Kong is closed for a public holiday Monday.

U.S. stocks rose Friday as investors held out hope for a spending package, with the S&P 500 Index paring a weekly decline. Treasuries advanced, though the 10-year yield remained above 0.8%. Oil extended a decline.

Investors remain focused on the chances of an agreement on a stimulus package as November’s election fast approaches. Still, concerns are mounting that surging virus cases could force additional business closures. The U.S. added more than 85,000 cases in a record figure for one day.

“There is very limited incentive on both sides to get a deal done,” Joseph Shaposhnik, a portfolio manager at TCW, said on Bloomberg TV. “The market has baked that in, has baked in the election and is looking out six months and thinking what are the odds life begins to normalize, a vaccine is introduced.”

President Donald Trump’s chief of staff said the U.S. isn’t going to “control” the pandemic. U.S. Vice President Mike Pence’s chief of staff tested positive, raising the prospect of another outbreak within the White House. Cases also continue to surge in Europe and other parts of the world.

Meanwhile, China is rethinking its yuan internationalization strategy and a senior central bank official called for more proactive with policies to support markets, including improving bilateral currency swap agreements.

These are some events to watch this week:

The Chinese Communist Party’s Central Committee holds its all-important plenum, where it’s expected to chart the course for the economy’s development for the next 15 years. Through Oct. 29.Brexit negotiating teams have started intense daily negotiations, and these are likely to continue as both sides push to finalize a deal by the middle of November.Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.The first reading of U.S. 3Q GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the major moves in markets:

Stocks

S&P 500 futures fell 0.6% as of 8 a.m. in Tokyo. The S&P 500 Index rose 0.3% Friday.Nikkei 225 futures edged up 0.3%.Australia’s S&P/ASX 200 Index was little changed.

Currencies

The yen was little changed at 104.70 per dollar.The offshore yuan was at 6.6652 per dollar.The euro fell 0.1% to $1.1854.The British pound traded at $1.3043.The Bloomberg Dollar Spot Index rose 0.1%.

Bonds

The yield on 10-year Treasuries fell one basis point to 0.84% Friday.Australia’s 10-year bond yield fell four basis points to 0.82%.

Commodities

West Texas Intermediate crude lost 2.1% to $39.01 a barrel Friday.Gold dropped 0.6% to $1,891.60 an ounce.

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