U.S. Futures Drop; India Assets Rally on Rate Cut: Markets Wrap

(Bloomberg) -- U.S. equity futures dropped after the first three-day rally in American equities since mid-February, while sovereign bonds advanced as investors take stock of strengthening stimulus efforts across the globe.India’s bonds and currency jumped after monetary policy makers slashed rates in an emergency move. S&P 500 futures dropped about 2% after the index surged over 6% Thursday. The dollar headed for its biggest weekly fall since 2009, with central banks sharply boosting the provision of greenbacks. Asia-Pacific equities had a mixed showing, ranging from a 2%-plus jump in Tokyo to an over 4% slide in Sydney.The Reserve Bank of India Friday became the latest to act decisively in the effort to forestall a sudden stop in credit as economic shutdowns hobble businesses. The RBI cut the benchmark rate three quarters of a percentage point and, among other measures, reduced the amount lenders must hold in reserve. Ten-year government bonds rose the most in more than a year.The move book-ended a week that began with an unprecedented array of actions by the Federal Reserve to support credit, and also featured historic moves by the European Central Bank to broaden its support for the euro region. The MSCI All Country World Index is up 13% for the week, clawing back more than half the losses of the previous fortnight.While dramatic, the sudden revival of demand for risk assets will be tested by the continuing spread of the coronavirus and the crippling effect of business closures. Tokyo is now seeing a surge in cases, while the U.S. has overtaken China with the most infections worldwide.“The market is pricing in a fairly short duration of weakness” for the economy, Priya Misra, global head of rates strategy at TD Securities, said on Bloomberg TV. “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,” she said.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:StocksFutures on the S&P 500 slid 2% as of 2:25 p.m. in Tokyo. The S&P 500 rose 6.2% on Thursday.Euro Stoxx 50 futures lost 1.3%.Japan’s Topix Index rose 2.5%.The Shanghai Composite added 0.9%.Hong Kong’s Hang Seng rose 0.5%.Australia’s S&P/ASX 200 Index slid 5.3%.Kospi Index was little changed.CurrenciesThe yen was at 108.43 per dollar, up 1%.The offshore yuan traded at 7.0767 per dollar, little changed.The euro bought $1.1062, up 0.3%.BondsThe 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.CommoditiesWest Texas Intermediate crude rose 1.8% to $23 a barrel.Gold slipped 0.4% to $1,626 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.