European shares look set to tumble amid reports of potential lockdowns in Germany and France, with Euro Stoxx 50 futures STXEc1 down 1.3% at five-month lows. FTSE futures FFIc1 were down 0.5% to hit lows last seen in mid-May.
Futures for U.S. S&P500 ESc1, Dow Jones YMc1 and Nasdaq NQc1 all fell 0.2-0.4%, rattled by a media report that French government may bring in a national lockdown from midnight on Thursday.
German newspaper Bild, meanwhile, reported that Chancellor Angela Merkel wants to close all restaurants and bars and some other venues from Nov. 4 in a bid to curb new infections.
The United States, Russia, France and other countries have registered record numbers of infections in recent days, and European governments have introduced new curbs.
Shares in Asia fared better, thanks in part to more limited COVID-19 outbreaks. Japan’s Nikkei .N225 fell 0.4% while MSCI’s ex-Japan Asia index .MIAPJ0000PUS eked out gains of 0.1% due to gains in China .CSI300 and South Korea .KS11.
“The relative strength of Japanese and Asian clearly reflects a difference in the coronavirus infections,” said Naoya Oshikubo, senior economist at Sumitomo Trust Asset Management.
The fall in U.S. stock futures came after a mixed session on Wall Street, where the S&P 500 .SPX lost 0.30% on virus worries while the tech-heavy Nasdaq Composite .IXIC added 0.64%.
Microsoft MSFT.O kicked off a slate of reporting from tech heavyweights by beating Wall Street estimates for quarterly revenue, buoyed by its flagship cloud computing business amid increased work-from-home arrangements. But its shares slipped 1.7% after the bell.
Apple Inc AAPL.O, Amazon.com AMZN.O, and Google-parent Alphabet GOOGL.O are among major tech players reporting later this week.
Investors steered clear of risk with looming uncertainty, headlined by the Nov. 3 U.S. presidential election.
As former Vice President Joe Biden has enjoyed a consistent lead over President Donald Trump, investors have been cautiously betting on his victory and possibly a “blue wave” outcome, where Democrats take back the Senate as well.
Still the presidential race is closer in battleground states that could determine the outcome, leaving many investors on edge.
“It appears the gap between Biden and Trump is shrinking a bit lately. In particular, Biden’s lead in swing states doesn’t look that different from (Democratic candidate) Hilary Clinton’s in 2016,” said Nobuhiko Kuramochi, market strategist at Mizuho Securities.
“People still remember the 2016 experience and those who have bet on a blue wave are probably taking some profits now ahead of the event,” he added.
Wall Street’s volatility index .VIX, a measure of market expectations in share price swings, rose to 33.35, its highest in almost two months.
Some market players see that as a sign more investors are wary that the election outcome could be contested, possibly leaving markets in limbo for weeks.
That would likely further delay any negotiation on economic relief package U.S. policymakers have been struggling to agree on. Trump acknowledged an economic relief package would likely come after the election.
In the currency market, the euro edged lower on concerns about a possible lockdown in France, trading at $1.1783, down 0.1%.
The safe-haven yen gained 0.2% to 104.22 yen per dollar JPY=, not far from its six-month high of 104 touched last month.
The yuan eased against the dollar after some banks tweaked a methodology for fixing the yuan’s daily midpoint, a fresh sign that Beijing may be attempting to slow a 6% rally in the Chinese currency since late May.
Investors also bought back U.S. Treasuries, another safe-haven asset, pushing down their yields.
The benchmark 10-year US10YT=RR yield dropped to 0.769%, down 1.2 basis point so far on Wednesday and way below its 4 1/2-month high of 0.872% hit on Friday.
Gold was little changed at $1,906.0 per ounce XAU=.
Oil prices gave up much of their gains made the previous day as a jump in U.S. crude inventories and surging COVID-19 cases raised fears of an oversupply of oil and weak fuel demand.
By 0550 GMT, Brent crude LCOc1 was trading down 1.6% at $40.53 a barrel, while U.S. crude CLc1 fell 2.1% to $38.75 per barrel.