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World stocks take fresh dip as COVID infection rate weighs

EconomyOct 30, 2020 07:30AM ET
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2/2 © Reuters. People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo 2/2

By Simon Jessop

LONDON (Reuters) - World stocks fell further and oil headed for a double-digit weekly slide on Friday as jitters over a rising global COVID-19 infection rate and next week's U.S. presidential election more than offset strong euro zone quarterly growth data.

A strong central bank-fuelled bounce back from the initial pandemic slide earlier in the year has faltered this week, with concerns about an even worse second wave of infections, particularly in Europe, taking the froth off markets.

"The US election, the extent of further lockdown measures, Brexit negotiations and vaccine news all present both upside and downside risks over the coming weeks and it is understandable that investors may want to proceed with caution," said Mark Dowding, chief investment officer at BlueBay Asset Management.

World stocks (MIWD00000PUS) were down 0.3% at 0925 GMT, tracking weakness in Asia, while U.S. stock futures (ESc1) (NQc1) were down 1% to 1.3%. Gold rose, with spot prices climbing 0.3% to $1,873 an ounce.

In Europe, the blue-chip EuroSTOXX 50 (STOXX50E) was down 0.7% to take its weekly loss to 6.9% and leaving it at levels last seen in late May. MSCI's broadest index of Asia-Pacific shares outside of Japan (MIAPJ0000PUS) closed down 1.2% for a 2.2% weekly loss, breaking four straight weeks of gains.

"New lockdowns across Europe are being harshly repriced by markets," Barclays (LON:BARC) equity strategist Emmanuel Cau said in a note to clients.

"With complacency going fast, this dip could end up offering another good entry point, but a lot depends on the election outcome and timing of the results."

European government bond yields rose in response to fresh COVID restrictions across the continent, with Italian, Spanish and German 10-year debt yields all up between 1 and 2 basis points.

While Brent crude (LCOc1) enjoyed something of a bounce approaching midday in London - up 0.5% and broadly in line with its U.S. peer (CLc1) - it still remains down sharply on the week, facing losses of nearly 10%.

That in turn led to a broad sell-off of commodity linked currencies including the Russian rouble , Norwegian crown and Canadian dollar , which was facing its worst week since April.

Graphic: Stocks, oil vs coronavirus cases https://fingfx.thomsonreuters.com/gfx/mkt/jbyprxdzope/Pasted%20image%201604051261032.png

The weak sentiment dragging Europe lower came despite a strong showing in euro zone quarterly GDP figures - up 12.7% -, one day after the European Central Bank pledged more help for the economy when it next meets in December to help counter the potential economic hit from the pandemic.

Societe Generale (OTC:SCGLY) FX analyst Kit Juckes said that given the recent imposition of a fresh lock-down in France, the positive growth data there - an 18.2% quarter-on-quarter jump - was not enough to outweigh the virus concerns.

This week has seen global coronavirus cases rose by over 500,000 for the first time, with France and Germany prepping fresh lockdowns.

In response, analysts expect an expansion and extension of the ECB's Pandemic Emergency Purchase Programme, a lower deposit facility rate, and even more generous lending terms for banks in December.

The announcement sent the euro (EUR=) sliding to a four-week low of $0.1648 before recovering slightly on Friday to trade at $1.1679, down around 0.4% since the start of the month.

The dollar index (=USD), meanwhile, held steady, bolstered by a solid session on Wall Street overnight after some strong tech sector earnings and data showing the U.S. economy grew at a record annualised pace of 33.1% in the third quarter.

World stocks take fresh dip as COVID infection rate weighs
 

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Comments (9)
Pat Mathieu
Pat Mathieu Oct 30, 2020 12:49PM ET
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MSM clinging to their Covid story in an ocean of great news (and Biden scandal) ... sorry Dems.
Andrew carson
Andrew carson Oct 30, 2020 7:42AM ET
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More cases from more testing..
John Healy
John Healy Oct 30, 2020 7:42AM ET
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More hospitalizations and deaths, more cases per capita.
Kelly Mayer
Kelly Mayer Oct 30, 2020 6:31AM ET
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Deaths inscreasing proportionaly as they did back in March? No. Toxic propaganda. Biden doom and gloom campaign.
John Healy
John Healy Oct 30, 2020 6:31AM ET
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Doctors’ ability to mitigate this disease are increasing. Hospitalizations and deaths ARE increasing. Any denial of these facts is toxic logic.
Pat Mathieu
Pat Mathieu Oct 30, 2020 6:31AM ET
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Marginally and not for long, vaccin's arround the corner.
Έλενα Αλβέρτη
Έλενα Αλβέρτη Oct 30, 2020 6:23AM ET
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Weird, usually markets are been driven by forward thinkers, Regeneron developments and Pfizer upcoming vaccine news are overlooked.  It seems that the political games are driving the markets for the short term. I see this as a buy opportunity.
Kelly Mayer
Kelly Mayer Oct 30, 2020 6:23AM ET
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H. Hunter c.o-r.r-u.p-t.i-o.n being overlooked aswell. No worries, it will end Wednesday.
Pat Mathieu
Pat Mathieu Oct 30, 2020 6:23AM ET
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I totally agree, confluence of interests: Dem's MSM propaganda and Wall Street bear trap .
Pat Mathieu
Pat Mathieu Oct 30, 2020 6:09AM ET
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Reuters painting a sad picture before the election ... Reality: US and EU GDP's are through the roof.
Attila Bakk
Attila Bakk Oct 30, 2020 2:23AM ET
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The street got tipped off on new lockdown measures
Pat Mathieu
Pat Mathieu Oct 30, 2020 2:23AM ET
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Same feeling, earlier price drop didn't make sense, I bough French banks, next day Macron was announcing a lock down.
Alfri Arhat
Alfri Arhat Oct 29, 2020 10:22PM ET
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take over south seas wont be easy as US got approval to build military base around natuna island..
divad mocihc
9divaD Oct 29, 2020 10:22PM ET
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I would be happier with a US base on Spratly Islands
divad mocihc
9divaD Oct 29, 2020 10:10PM ET
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i told you guys, all part of the plan. virus release + red spin + take over south seas = victory ... it clearly doesn’t matter how many perish ... men, money, & power is rule of history
Yogi Anji
Yogi Anji Oct 29, 2020 9:26PM ET
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Sure it will go down all asia mkts. :)
 
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