Euro Climbs Amid Stimulus Talks; Stocks Erase Drop: Markets Wrap – Yahoo Canada Finance

(Bloomberg) — The euro strengthened to a four-month high, and European bond spreads narrowed after leaders made progress in negotiating a historic stimulus package. European shares erased losses.

Italy’s 10-year bond yield spread over Germany, a key gauge of risk in the region, fell to the lowest level since March. U.S. equity futures pointed to a weaker open. AstraZeneca Plc gained ahead of highly anticipated results from early vaccine studies. Oil extended losses toward $40 a barrel.

In Europe, leaders appeared close to reaching an agreement on a rescue package. The four governments that have been holding up negotiations are ready to agree on a key plank of the deal, two officials said. The Netherlands, Austria, Denmark and Sweden are satisfied with 390 billion euros of the fund being made available as grants with the rest coming as low-interest loans, the officials said, asking not be named discussing private conversations.

EU Holdouts Ready to Accept 390 Billion Euros in Grants for Fund

“Our base case is a deal is done by the end of the month, but I still think today is possible,” said James McCormick, the global head of desk strategy at NatWest Markets. “The euro’s broad-based rally was a big macro story last week and it clearly reflected a growing optimism around eventual passage of the recovery fund.”

While stock markets have inched higher in recent weeks, there are still plenty of worries about the health of the global economy, especially with the virus spreading unabated in parts of the U.S. In the euro area, unemployment could hit almost 10% by the end of the year as the economy slumps, according to a Bloomberg survey.

A Jobless Recovery Is Becoming a Real Risk for Europe’s Economy

Los Angeles Mayor Eric Garcetti has warned that the city is on the brink of another stay-at-home order. Hong Kong added a record 108 infections, will require civil servants to work from home and plans to mandate wearing of masks in all shared indoor areas.

“Our base case remains for the economic recovery to continue, but for the deep V rebound evident in much recent data to give way to a slower bumpier recovery going forward,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. “Shares are still vulnerable to a further correction or consolidation, with renewed lockdowns and the U.S. presidential election being the main risks.”

Here are some key events coming up:

Quarterly earnings gather steam, including Blackstone Group, Microsoft, Roche, Intel, Unilever, Canadian Pacific, UBS, Tokyo Steel, Daimler, Hyundai and Mattel.The EIA crude oil inventory report is due Wednesday.U.S. weekly jobless claims come on Thursday.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index dipped 0.2% as of 9:51 a.m. London time.The Stoxx Europe 600 Index climbed 0.1%.The MSCI Asia Pacific Index gained 0.2%.The MSCI Emerging Market Index rose 0.3%.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1%.The euro jumped 0.3% to $1.146.The British pound rose 0.2% to $1.2586.The Japanese yen weakened 0.1% to 107.18 per dollar.The offshore yuan strengthened 0.1% to 6.9877 per dollar.

Bonds

The yield on 10-year Treasuries sank one basis point to 0.62%.The yield on two-year Treasuries declined less than one basis point to 0.14%.Germany’s 10-year yield climbed less than one basis point to -0.45%.Britain’s 10-year yield dipped less than one basis point to 0.16%.Japan’s 10-year yield rose one basis point to 0.031%.

Commodities

West Texas Intermediate crude declined 0.5% to $40.35 a barrel.Brent crude dipped 0.4% to $42.91 a barrel.Gold was little changed at $1,811.11 an ounce.

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