U.S. Stock-Index Futures Erase Gains as Asia's Sell-off Seeps In

(Bloomberg) -- U.S. equity-index futures erased earlier gains after Chinese President Xi Jinping’s speech on Tuesday failed to lift investor sentiment.

March e-mini contracts on the S&P 500 were little changed as of 3:08 p.m. in Tokyo after rising as much as 0.5 percent earlier on Tuesday. The morning climb in stock-index futures came after a rout in the U.S. sent the S&P 500 Index to a more than one-year low. The MSCI Asia Pacific was down 1.1 percent.

Stock markets in Asia extended declines after Xi’s speech marking the 40th anniversary of China’s reform disappointed investors that had been expecting economic stimulus or further opening up, said Francis Lun, Chief Executive Officer at Geo Securities Ltd.

Key Insights

• The S&P 500 dropped to a 14-month low as Wall Street keeps watch on a partially inverted yield curve and weakening global economic data. The Federal Reserve is likely to hike rates on Wednesday, even as President Donald Trump intensifies his attacks on the central bank.
• Xi in his speech on Tuesday said China would stick to its policy agenda, despite pressure from the U.S. and others to allow more competition in its economic system. No new major policies were announced and Xi dedicated long passages of the speech to reiterating the need for the Communist Party to exercise leadership and control over all aspects of the country’s development.
• Tensions between the U.S. and China are still lingering as negotiations progress to end the trade spat between the world’s two largest economies. While China’s openness to cutting tariffs on U.S. cars and buying soybeans is feeding optimism that the dispute will be resolved, investors remain cautious a deal will be done by the March 1 deadline.
• Crude settled below $50 a barrel in New York on Monday, for the first time in more than a year. The U.S. Energy Department and data provider Genscape Inc. were among those predicting higher American supplies, as uncertainties persist over the effectiveness of curbs by the OPEC+ coalition.

Get More

• Nothing Is Working as Bulls Run Low on Saviors in Stock Sell-Off
• Charts Take Ominous Turn With S&P 500 February Floor Under Siege
• China’s U.S. Treasuries Holdings Tumble to Lowest Since May 2017
• Fed Rate Hikes Are Extremely Rare When Stocks Are This Beaten Up

Market Reaction

• March contracts on S&P 500 Index little changed after swinging between gains and losses as of 3:08 p.m. in Tokyo; the underlying gauge is on track to post its biggest December slide since 1931.
• Dow Jones Industrial Average futures were little changed after rising as much as 0.5 percent. Nasdaq 100 Index futures up 0.2 percent, paring earlier rise of as much as 0.6 percent.

--With assistance from Moxy Ying.

To contact the reporter on this story: Matthew Burgess in Sydney at mburgess46@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Cecile Vannucci

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