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Global shares retreat as coronavirus surges, Sino-U.S. tensions rise

CoronavirusJul 14, 2020 06:20AM ET
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2/2 © Reuters. An SGX sign is pictured at Singapore Stock Exchange 2/2

By Tom Arnold and Tom Westbrook

LONDON/SINGAPORE (Reuters) - Global stocks slipped on Tuesday, oil sagged and a safety bid supported the dollar as simmering Sino-U.S. tensions and new coronavirus restrictions in California kept a lid on investor optimism with earnings season getting underway.

MSCI's All-Country World Index edged down 0.4%, after touching a 20-week high on Monday. The pan-European STOXX 600 opened 1.5% lower and was heading for its worst day in 14 sessions after technology stocks dropped 3.4%. This followed a slump a day earlier in the tech-heavy Nasdaq.

One of the gainers was German meal-kit delivery firm Hellofresh, which added 4.3% as it raised its full-year revenue forecast.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.9%. Chinese stocks were down despite better-than-expected trade numbers. The U.S. dollar firmed marginally.

The moves followed a selloff on Wall Street after California Governor Gavin Newsom ordered bars closed and restaurants and movie theatres to cease indoor operations.

S&P 500 futures were 0.5% stronger after the index lost 0.9% on Monday.

Tension grew between Washington and Beijing after the United States rejected China's disputed claims to offshore resources in most of the South China Sea.

The Trump Administration also plans to scrap a 2013 auditing agreement that could foreshadow a broader crackdown on U.S.-listed Chinese firms.

"It's not just the tempo which is picking up, but the aspect of so many areas being pulled in to the dispute," said Vishnu Varathan, head of economics at Mizuho Bank in Singapore.

"Last time it was really about the bottom line," he said, adding that what had primarily been a trade dispute is now much broader, making a resolution less likely and the next moves less predictable.

The Shanghai index fell 0.7% despite official figures showing Chinese exports and imports topped forecasts in June, while China continued to buy significant amounts of commodities including iron ore.

The return of restrictions in California also has markets on edge about whether the coronavirus can wreak more economic harm. Global infections have surged by a million in five days, and top 13 million.

Graphic: Global earnings 2020 forecast https://fingfx.thomsonreuters.com/gfx/buzz/bdwvkamxdvm/Pasted%20image%201594627756300.png

ALL ABOUT 2021

Oil prices, a proxy for global energy consumption and growth expectations, reflected the concerns. U.S crude futures fell 1.5% to $39.52 per barrel and Brent futures fell 1.3% to $42.16 per barrel.

Investors sought out the safety of eurozone government bonds. Most yields were about 2-3 basis points lower, with Germany's 10-year Bund yield, the region's benchmark, dropping 2.5 bps to -0.43%.

There are also signs of an interruption to the steady flow of better-than-expected economic data. On Tuesday, data showed Singapore entered recession last month, with the economy contracting 41.2% for the quarter, worse than the 37.4% analysts had forecast.

Currency markets hemmed the dollar in a tight range. Against a basket of currencies, the dollar index was last up 0.1% at 96.662. The euro was down 0.1% against the dollar at $1.1331.

Currencies exposed to global trade sentiment such as the Australian dollar and China's offshore yuan were down.

Focus shifts later to U.S. earnings, with JP Morgan, Citigroup (NYSE:C), Wells Fargo (NYSE:WFC) and Delta Air Lines (NYSE:DAL) due to report on Tuesday to a market already looking ahead to 2021 and beyond.

"It's really about 2021 -- 2020 is over," said fund manager Hugh Dive, chief investment officer at Atlas (NYSE:ATCO) Funds Management in Sydney, where earnings season properly begins next month.

"The outlook statements are what the market will look at," he said. "If a company surprises on the upside with their 2020 earnings, but has shaky commentary for 2021 .... they're not going to be rewarded for that."

Spot gold slipped 0.2% at $1,798.79 per ounce as the dollar strengthened.

Graphic: World FX rates in 2020 http://fingfx.thomsonreuters.com/gfx/rngs/GLOBAL-CURRENCIES-PERFORMANCE/0100301V041/index.html

Global shares retreat as coronavirus surges, Sino-U.S. tensions rise
 

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Comments (13)
Strela Fxxx
Strela Fxxx Jul 14, 2020 1:32PM ET
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With a weak dollar, Trump will lose the election!
Selene Annika
seleneannika1980 Jul 14, 2020 10:04AM ET
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For huge daily profits. WA: +1 (712) 796 0331
Tabi Chu
Tabi Chu Jul 14, 2020 7:59AM ET
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Recycled garbage as usual
ADAM FANNING
ADAM FANNING Jul 14, 2020 7:47AM ET
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So many contradicting articles!
Tim Mcdaniel
Tim Mcdaniel Jul 14, 2020 6:42AM ET
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( insert news here), as Corona virus cases surge! Use until November 3rd.
Chris Sundo
Chris Sundo Jul 14, 2020 2:29AM ET
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Wouldn't be surprised if they interpret bank earnings as negative in order to continue this momentum as a bearish breadth thrust
Tommy Arencibia
Tommy Arencibia Jul 14, 2020 1:47AM ET
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Obvious what you are doing here,
Mosaab Mustafa
Mosaab Mustafa Jul 14, 2020 1:47AM ET
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Tell us more! Newbie here.
Benjamin Kang
Benjamin Kang Jul 14, 2020 1:04AM ET
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God how i despise your headlines. It's either markets rise despite virus and now markets dip because of virus. If you have no clue just leave it.
Chris Sundo
Chris Sundo Jul 14, 2020 1:04AM ET
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FULLY AGREED, Man! -- It feels soo wrong to read and give credit by default, to what you think the author has put on paper with sincerity and not with the intent to pull the wool over the reader's eyes. -- It's gut-churning as a reader to constantly have to say: 'Baloney!', The Asian markets are a follow-through from Wall Street, manipulated by WS brokerage houses located in Asia and pretending their sessions in Asia have a different reason than ultimate manipulation.
Dietmar Stahl
Dietmar Stahl Jul 14, 2020 12:18AM ET
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Vaccine trials are ready to sign up for. Per Fauci ready by end of the year
Chris Sundo
Chris Sundo Jul 14, 2020 12:18AM ET
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The vaccine was among the causes of more death in the Spanish Flu deaths of 1918. Vaccine will be HIT AND MISS because the virus constantly mutates. It's like trying to hit a moving target. --- Vaccine for COVID like vaccine for the FLU will make only a 1 week acceleration in recovery: NOT WORTH TAKING THE RISKS. -- REMEMBER THE REASONS why HIV does not have a vaccine? Same reason as covid: constant mutation. ---------- Vaccine Trials are just another CON JOB to keep desperate trump money flowing into BioTech.
Simon Meszaros
Simon Meszaros Jul 14, 2020 12:18AM ET
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Chris Sundo there are corona virus like vaccines which are updated every year and wotks very well. Please have a little trust. Definitely not a gmae changer tho.
Camaro Camero
Camaro Jul 14, 2020 12:18AM ET
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Chris Sundo  Agreed and I keep telling people this. There will be no vaccine. Keep running those biotech stocks up, people. I need the money!
Ciby Jose
Ciby Jose Jul 13, 2020 11:34PM ET
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After snatching south china sea resources from Vietnam and Philippines, China will claim all the resources of the path of Chinese ships, belong to China ...:) Ha Ha
Chris Sundo
Chris Sundo Jul 13, 2020 11:34PM ET
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yo yo  -- yeah, i was reading this yesterday and i thought 'WHAT'? -- A few months ago he was best buddy with China and now he is barking .. Cheezis galore. All these bully autocrats including trump, they think they can do what they want and nobody notices ..
 
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