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U.S. Stock Futures Slip as Investors Move to Safety of Government Bonds

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07/10/2020 | 06:23am EDT

By Xie Yu and Avantika Chilkoti

U.S. stock futures pointed to a lower open and investors piled into the safety of government bonds as jitters mounted about the recovery from Covid-19 lockdowns.

Stock futures linked to the S&P 500 were down 0.4%. European stocks traded slightly higher, with the Stoxx Europe 600 index up 0.2%. Asian markets were mostly lower as China's recent market rally lost steam.

Global investors appeared to grow increasingly concerned about the impact of the coronavirus spread in the U.S. on the economic outlook, and sought shelter in government bonds Friday. The yield on the 30-year Treasury fell to 1.279%, its lowest since May, and the yield on the 10-year Treasury hit 0.582%, its lowest since April.

"At some stage you accept the reality that Covid hasn't gone away, that it's going to have an impact on all economies in terms of social distancing until we have a vaccine," said Brian O'Reilly, head of market strategy for Mediolanum International Funds.

In China an uninterrupted streak of stock market gains ended Friday, with the Shanghai Composite Index closing nearly 2% lower. It had risen 16.5% over eight straight sessions of gains, the biggest eight-day percentage gain since March 2008, according to Dow Jones Market Data.

Perhaps seeking to avoid a repeat of the stock market bubble and bust of 2015, Chinese authorities have signaled concerns about overshooting, with a state-run financial newspaper stressing the importance of long-term investment.

Friday's fall may have been propelled by actions by state-owned investors. Filings showed that big players such as the National Council for Social Security Fund had unloaded stocks, according to Alvin Ngan, strategist at Zhongtai International Holdings, a Hong Kong-based brokerage.

"The cooling tone from the authorities could take some of the sheen off the frenetic market, " he said.

In commodities, Brent crude, the international benchmark for oil prices, fell 1.5% to $41.72 a barrel, amid concerns that the rising number of Covid-19 cases could upset any rise in energy demand.

In individual stocks, shares in Carlsberg rose 5% after the Danish brewing company said its businesses in Europe and China were rebounding after coronavirus lockdowns.

Write to Xie Yu at Yu.Xie@wsj.com and Avantika Chilkoti at Avantika.Chilkoti@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
CARLSBERG A/S -5.79% 885.6 Delayed Quote.-5.41%
DJ INDUSTRIAL -0.24% 27916.91 Delayed Quote.-1.97%
LONDON BRENT OIL -0.35% 45.08 Delayed Quote.-32.59%
NASDAQ 100 0.33% 11200.018834 Delayed Quote.27.76%
NASDAQ COMP. 0.41% 11061.51459 Delayed Quote.22.73%
S&P 500 -0.12% 3377.13 Delayed Quote.3.19%
S&P/CITIC 300 INDEX -0.01% 4029.52 Delayed Quote.13.72%
S&P/CITIC 50 INDEX -0.02% 3912.74 Delayed Quote.5.08%
STOXX EUROPE 600 -0.63% 372.53 Delayed Quote.-9.85%
STOXX EUROPE 600 NR -0.55% 817.78 Delayed Quote.-8.37%
WTI -0.38% 42.345 Delayed Quote.-32.22%
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