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Stocks sapped by coronavirus surge, recession gloom

EconomyJun 25, 2020 09:00AM ET
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2/2 © Reuters. Passersby wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen displaying stock prices outside a brokerage in Tokyo 2/2

By Marc Jones

LONDON (Reuters) - World stocks spluttered to their lowest level in more than a week on Thursday, as a surge in U.S. coronavirus cases and an IMF warning of an almost 5% plunge in the global economy this year hit the bulls again.

Asia suffered its biggest drop in eight sessions overnight and though Europe's STOXX 600 recovered from an early 1% fall it remained unsteady, while Wall Street was expected to open 0.5% in the red.

After a white-hot few months for markets that has seen world stocks rebound nearly 40%, nervousness about the impact of COVID-19 was rising again.

In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday and Australia posted its biggest daily rise in two months.

The governors of New York, New Jersey and Connecticut ordered travellers from eight other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.

Disney has delayed the re-opening of theme parks and resorts in California, and Texas is facing a "massive outbreak" and considering new localised restrictions, its governor said.

"During the swift rebound since the March lows, equity markets may have gotten a little ahead of themselves," wealth manager DWS said in a quarterly Chief Investment Officer report.

With the added pressure of looming half year portfolio reviews, investors were huddling in traditionally safer government bonds and gold.

The International Monetary Fund said on Wednesday it now expects global output to shrink 4.9% this year rather than the 3% it predicted in April.

"There is a little bit of reality bites coming," said Damian Rooney, senior institutional salesman at stockbroker Argonaut in Perth. "I don't think there was a particular straw that broke the camel's back, but people are a little bit twitchy."

UBS' chief economist Paul Donovan said, however, that international organisations tend to lag behind and many economists were now revising forecasts up, not down.

"The IMF has been too pessimistic on growth in 27 of the past 30 years. It tends to be significantly too pessimistic when there are big structural changes."

For now the subdued mood helped the dollar build on broad gains in the FX markets which had lifted it from near a two-week low. [FRX/]

Yields on benchmark 10-year U.S. Treasuries and German Bunds sank to 10-day lows of 0.66% and -0.47% although they remained within their well-worn recent ranges.

LAYOFFS

Weekly jobless claims data showed weak demand is forcing U.S. employers to lay off workers, even as businesses reopen. Claims totalled a seasonally adjusted 1.480 million for the week ended June 20 and although down from 1.540 million the prior week, it was higher than the 1.3 million a Reuters poll had expected.

Bank of England chief economist Andy Haldane, who argued against last week's increase to the bank's bond-buying programme, is due to speak about the future of society at 1700 GMT. The pound was up for a third day in four before that. [GBP/]

Signals on the trade front and political uncertainty have also added to jitters.

The United States has added items valued at $3.1 billion to a list of European goods eligible to be hit with import duties.

The Trump administration has meanwhile determined that China's Huawei and video surveillance company Hikvision are owned or controlled by the Chinese military, laying the groundwork for sanctions and new Sino-U.S. tension.

That stalled a rally in riskier currencies, and pushed the Australian dollar under 69 cents and left the kiwi stuck around 64 cents. [AUD/]

Gold hovered around $1,757 an ounce [GOL/], while Brent crude slipped back under $40 a barrel and U.S. crude futures fell by 60 cents a barrel or 1.6% to $37.40.

Stocks sapped by coronavirus surge, recession gloom
 

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Comments (10)
RedBlue Dolby
RedBlue Dolby Jun 25, 2020 9:21AM ET
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We can survive without job and money,  owing to Trumpet.
Jusuf Seferi
Jusuf Seferi Jun 25, 2020 6:51AM ET
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we must live with the virus.lets forget for it and back to normallity again
David Ganser
David Ganser Jun 25, 2020 6:51AM ET
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jusuf, right, as we head toward the million man march...to the grave
Ha Has
Ha Has Jun 25, 2020 2:34AM ET
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So what? Are we going to live the rest of our lives with that Covid ****? Yes there are infections but most of them are asymptomatic 30year olds (why do they get tested in the first place is beyond me) .. yes there is unnecessary huge employment but the majority of the workforce is working and a lot of furloughed workforce is returning every week. Stores are back to business and most people don't even wear masks. Nobody cares any more except the FAKE NEWS. No official -except Trump- is man enough to come out and say this is exaggerated panic! They are all going with the flow, destroying their states economies with this fear mongering!! There is a reason the US economy is taking a hard hit unlike many other countries, it's because the "lamestream" media has caused unnecessary panic and fear just for monetary and political gain!!
Ha Has
Ha Has Jun 25, 2020 2:34AM ET
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78,000 deaths from flu last year. A disease with a vaccination.
Daniel Bohbot
Daniel Bohbot Jun 25, 2020 2:11AM ET
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Coronavirus and unemployment and reduction in consumer spending and major loan defaults coming and and and.
Pat Mathieu
Pat Mathieu Jun 24, 2020 11:34PM ET
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I wouldn't be surprised that some Jussie Smolletts are spreading the virus intentionally. Hope the FBI is looking into this.
Daniel Bohbot
Daniel Bohbot Jun 24, 2020 11:34PM ET
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What??? Meth is a dangerous drug dude
Brady Murray
Brady Murray Jun 24, 2020 11:00PM ET
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Some good buy opportunities today on a few Covid plays and some cyclicals.
scott wilt
scott wilt Jun 24, 2020 11:00PM ET
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right on. my first green day this week lol. with a profit of $26. coulda earned a lot more on invvy, but didnt wanna be too greedy. and was too scared when i bought in, with only 5 shares. but made $15 on em.
Daniel Bohbot
Daniel Bohbot Jun 24, 2020 11:00PM ET
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Bryan. Save your money for a rainy day. Buying now is not a good idea. Just some friendly advice.
eddie gear
eddie gear Jun 24, 2020 10:48PM ET
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democrats are pure evil at this point. they are hoping people lose jobs, economy crashes, people die, medications dont work. they are so brainwashed they cannot even name a single policy of trump's that has negatively impacted them but they know their candidate biden is so weak they have to wish for death in the hopes it helps them in november
Pat Mathieu
Pat Mathieu Jun 24, 2020 10:48PM ET
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, Joe Biden couldn't build an Ikea table if he could read the instruction. He's never been anything else than a politician. He helped the economy yes!... of China 💰
Ted Dirty
DirtyTed Jun 24, 2020 10:48PM ET
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Randy Stukes 1/10 from covid...the rest is hoax
eddie gear
eddie gear Jun 24, 2020 10:46PM ET
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there is no difference in outcomes in countries that had significant lockdown vs no lockdown. nobody is arguing that COVID-19 is not real, it is called COVID-1984 because of all the fearmongering and nonsense that is not changing the course of the virus in any way. politicians and media just trying to capitalize on fear for their ulterior motives. everybody here hoping more people die are all democrats.
Alfred Teo
Alfred Teo Jun 24, 2020 10:46PM ET
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While it is not true that there is no difference as South Korea and Taiwan have done a great job in reducing the infection rates and minimize the casualty with their lockdown and tracing measures.
Robert DZ the patterns
Robert DZ the patterns Jun 24, 2020 10:46PM ET
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Fed pump isn't afraid of the corona
eddie gear
eddie gear Jun 24, 2020 10:45PM ET
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death rate plummeting. as expected more testing, more cases. many cases being detected are people who were previously infected. hospitals not overwhelmed. get over it. sorry your candidate biden ******** but no need to try and take down the country with you. at my local stores less than 20% of people are even wearing masks. hiding in your homes or behind a fabric mask does not stop anything.
Pat Mathieu
Pat Mathieu Jun 24, 2020 10:45PM ET
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I agree, it's basic arithmetic, but Reuters knows its leftist crowd isn't into arithmetic.
 
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