Stock futures tumble as oil rises, dollar routed

European banks led a global sell-off in financial stocks on Monday as signs of stress in the sector mounted, triggering sharp selling in the beaten-down Japanese banking sector.

“This is interesting considering Australian banks are not as exposed to liquidity issues as their USA and European counterparts”, said Lucas.

Shanghai, Hong Kong and Seoul, among others, were closed.

The dollar sank to 114.50 yen, having sat above 120 yen just a week ago.

During Asian trade hours, oil prices recovered slightly. “Greece, Deutsche Bank, shale gas – all we hear is bad news”.

“Earnings might deteriorate – especially in Japan after the BOJ implemented negative rates – but that’s different from a crisis”, said Monji. The distress that has brought global equities to the brink of a bear market in 2016 is flaring in the credit space, with the cost of protecting against company defaults worldwide surging. Late on Monday, the German bank said it had “sufficient” reserves to make due payments this year on AT1 securities. In early trading, France’s CAC 40 was down 0.7 percent at 4,038.41 and Germany’s DAX fell 0.5 percent to 8,933.11. The Topix slumped 76.08 points, or 5.51%, to close at 1,304,33.

GOOD GRIP: Goodyear Tire & Rubber jumped 8.4 percent after its latest quarterly earnings easily beat Wall Street’s forecasts.

Losses Tuesday were less severe in Europe than Asia. The Standard & Poor’s 500 slipped a point to 1,851.

Bellwether stocks BHP Billiton and Rio Tinto were down by 3.7% and 2.3% respectively as concerns about lower global commodity prices continued to affect the market.

The yields on Japan’s bonds have been low for years as the country kept its interest rates at or near zero.

Japan’s 10-year yield has dropped from 0.22 percent on January 28, the day before the central bank unexpectedly announced it would lower rates on excess reserves to minus 0.1 percent. The Aussie managed to hold more of its ground against the greenback, staying above 70 U.S. cents but still down 0.8 percent at $0.7033.

JGB yields plunged to record lows in 1998 and 2003. Most of Europe’s main indexes were trading higher.

“Those off celebrating Lunar New Year will be happy their markets are closed”, Chris Weston, chief markets strategist in Melbourne at IG Ltd., said in an email to clients. Against a basket of currencies, the dollar eased 0.1 percent to 96.485.

SALES CONCERNS: Viacom slumped 15.5 percent after the owner of Nickelodeon, MTV, Comedy Central and Paramount Pictures reported lower revenue for its latest quarter.

Japanese bond yields began falling sharply last week, but the currency has strengthened instead, creating further headache for policy makers.

The euro was flat at $1.1287 EUR= after scaling a four-month high of $1.1338 overnight on the dollar’s broader weakness. Spot gold in London was down 0.4% at $1186.63 an ounce, but remained near its highest level since June. Materials stocks led the gainers.

WTI was up 1.4 percent at $30.10 and Brent added 0.7 percent to $33.12. Stocks are coming off a two-day losing streak.