Caution gripped markets Thursday, with stocks falling before a crucial Eurogroup meeting to discuss joint stimulus measures, offsetting optimism from a fresh round of U.S. coronavirus aid and recovery in oil prices.
The U.S. Congress seemed on course to approve almost $500 billion more in aid to help small companies, while European Union leaders make another attempt at agreeing on a joint recovery fund.
European shares skidded 0.4%, and U.S. stock futures had been down 0.3% after a powerful showing Wednesday.
Adding further pressure had been enterprise exercise surveys in the eurozone that confirmed economies suffered huge blows from the coronavirus outbreak and measures to comprise it.
IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI) for the bloc, seen as a gauge of economic well being, sank to 13.5, by far its lowest reading since the survey started in mid-1998.
Shares and other dangerous assets barely acknowledged those numbers, although, since they had been largely backward-looking data. It was the EU assembly and the outcome that weighed on markets.
Italian two-year authorities bond yields plunged 5.5 basis points to 1%, after earlier slipping up to 12 bps to 0.94%. Ten-year yields had been down by the same amount at 2.05%.
The silver lining in macroeconomic news overnight was the European Central Bank’s resolution to let banks post collateral that was downgraded to junk during the coronavirus pandemic to stop a credit squeeze in the eurozone.