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Global shares waver on coronavirus fears

EconomyJul 08, 2020 06:15AM ET
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2/2 © Reuters. Employees of the Tokyo Stock Exchange work at the bourse in Tokyo 2/2

By Tom Arnold and Swati Pandey

LONDON/SYDNEY (Reuters) - Global stocks faltered on Wednesday as an increase in new coronavirus cases in some parts of the world undermined prospects for a quick economic recovery.

Frankfurt, Paris and London all opened lower as investors shifted to wait-and-see mode before upcoming earnings and clung to the perceived safety of the U.S. dollar.

The pan-European STOXX 600 fell 0.4%.

London-listed HSBC shed 4% after Bloomberg reported that U.S. President Donald Trump's top advisers weighed proposals to undermine the Hong Kong currency's peg to the U.S. dollar. The proposal could possibly limit the ability of Hong Kong banks to buy dollars.

Finland's Nokia (NYSE:NOK) lost 7.5% on worries that the company was losing the business of its key client Verizon (NYSE:VZ) in the United States.

It was a rosier picture in Asia, where Chinese stocks extended their gains to seven sessions, with the blue-chip index up 1.6% to its highest close since June 2015. MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.5%, still lower than a four-and-a-half-month high reached the day before.

E-mini futures for the S&P 500 were flat.

Overnight, U.S. stocks fell, halting a five-day winning streak by the benchmark S&P 500 index, its longest this year, driven by better-than-expected economic data.

"It is impossible for investors not to grow weary and eventually, at some point, fall prey to the endless drip of negative Covid-19 stories and how the second-wave virus will crush the market," said Stephen Innes, chief global market strategist at AxiCorp.

"Despite the lack of market participation, it certainly feels like we are gradually morphing from the view of a fragile recovery to one of full-bore scepticism."

Second-quarter earnings season begins in earnest next week.

"It will be important to watch the number of U.S. deaths in coming weeks and whether greater questions will be asked about the extent of necessary restrictions," said NAB economist Tapas Strickland.

California reported more than 10,000 coronavirus cases on Tuesday, a record rise for a single day. That exceeded the number of contact tracers recently trained by the state to detect and prevent potential outbreaks.

Coronavirus cases were also on the rise in the Australian state of Victoria, which led to lockdown measures being re-imposed in Melbourne, the country's second-biggest city.

MSCI's All-Country World Index, which tracks shares across 49 countries, was 0.2% down. (Graphic: World's biggest stock markets since start of 2020, https://fingfx.thomsonreuters.com/gfx/mkt/gjnvwwkrovw/Pasted%20image%201594112037896.png)

Citi analysts predicted global equities would hang around current levels in 12 months' time.

"We expect bullish and bearish forces to cancel each-other out," they said in a note. "We would not chase markets higher from current levels, but would prefer to wait for the next dip." Citi has "overweight" positions on U.S. and emerging-market equities.

Bond markets were focused on a meeting on Wednesday between European Union officials to discuss the shape of the EU's recovery fund.

Yields of German 10-year government debt edged 2 basis points lower to -0.477%, just above a one-week low of -0.495%.

Yields for Italian bonds, which have been the biggest beneficiary of the EU recovery fund proposals, were steady.

The dollar dipped slightly as investors weighed hopes for a quick economic recovery against anxiety about a resurgent pandemic, blurring the overall picture.

The euro strengthened a modest 0.12% to $1.2870 while a recent fall in selling positions against the greenback provided room for possible further drops.

Sterling traded at $1.2545, near three-week highs, before British finance minister Rishi Sunak announced his next moves to prevent a wave of job cuts from damaging an already weakened economy.

In commodities, gold breached $1,800 an ounce for the first time since 2011 as investors preferred safe-haven assets. Spot gold was 0.4% stronger at 1,802.4 per ounce.

Brent crude futures fell 0.1%, to $43.03 a barrel. U.S. West Texas Intermediate (WTI) crude futures slipped 0.3%, to $40.50 a barrel.

Global shares waver on coronavirus fears
 

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Comments (10)
Faisal Turkistani
Faisal Turkistani Jul 08, 2020 6:04AM ET
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No votes for Trump If this market will not Rally more than 3000 Points up
Camaro Camero
Camaro Jul 08, 2020 6:03AM ET
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You want to see some fear? Look at Bank of America. They closed all of their branches in Florida yesterday without any notice to their customers. Will not answer questions on when they will reopen. This is only the beginning. Quick, everyone under their beds!
Plopseven Schwartz
Plopseven Schwartz Jul 08, 2020 6:03AM ET
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I want to see DB implode over their Epstein & Trump links, but watching BOA in hot water is nice too.
Umut Saglam
Umut Saglam Jul 08, 2020 5:55AM ET
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Always the same. Stop (mis)using covid as a reason for letting stocks go down. It's been already more than 3 months. No one really cares anymore :p
wishful thinking
wishful_thinking Jul 08, 2020 5:45AM ET
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Covid is just a flu. Same symptoms, same infection rate and the real death rate is also the same. The only difference is the extreme media hype and panic driven by the media and some overzelaous doctors.
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Jozef Drozd
Jozef Drozd Jul 08, 2020 5:45AM ET
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Nk bag holder no need for it ! Stop the fear mongers and this covid hoax will disappear .
Paolo Sarvia
Paolo Sarvia Jul 08, 2020 5:45AM ET
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Yes, media are filling to top the intensive care beds in 10 States. I guess that beds are full of journalists.
Jozef Drozd
Jozef Drozd Jul 08, 2020 5:45AM ET
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Paolo Sarvia hospitals need the money and any reason is good to take new patients and covid is a lucrative business. One person after hospitalization for covid19 received over 1 million $ bill , google it .
Jacob Steinschlag
Jacob Steinschlag Jul 08, 2020 5:45AM ET
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I suppose you also believe the earth is flat
Jozef Drozd
Jozef Drozd Jul 08, 2020 5:45AM ET
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Jacob Steinschlag I also believe you have a square head ,lol
Tim Mcdaniel
Tim Mcdaniel Jul 08, 2020 3:46AM ET
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Trump sleeps four hours at night even as corona cases rise!
Tim Mcdaniel
Tim Mcdaniel Jul 08, 2020 3:43AM ET
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"strong winds and rain come as corona cases rise". this farce has gone on long enough. wake up everyone.
Notvery Goodathis
Peteymcletey Jul 08, 2020 2:18AM ET
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10k number was also clarified by CA.
Notvery Goodathis
Peteymcletey Jul 08, 2020 2:17AM ET
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"Better-than-expected economic data" Literally making things up now.
Dietmar Stahl
Dietmar Stahl Jul 08, 2020 1:00AM ET
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Only 4000 points left to the ceiling. You must buy now or miss out of the big money.
Dietmar Stahl
Dietmar Stahl Jul 08, 2020 12:46AM ET
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You must buy stocks now otherwise you miss out on it.
Jacob Steinschlag
Jacob Steinschlag Jul 08, 2020 12:46AM ET
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I smell attempt of market manipulation ;)
Camaro Camero
Camaro Jul 08, 2020 12:46AM ET
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stonks only go up!
 
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