Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks stall but China charge rumbles on

EconomyJul 07, 2020 08:45AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. An SGX sign is pictured at Singapore Stock Exchange 2/2

By Marc Jones

LONDON (Reuters) - A five-day charge by world stocks fizzled on Tuesday as caution about renewed coronavirus lockdowns took hold again, though it was not enough to douse China's July hot streak.

London, Paris and Frankfurt were down around 1% by early afternoon and Wall Street looked set for a drop, too, as investors shifted back into the dollar and government bonds.

Tokyo, Hong Kong and Seoul all lost ground in Asian trading. Shanghai's blue-chip index was sputtering by the close after adding to its 15% gains over the past week.

New coronavirus cases have surged in several U.S. states, forcing some restaurants and bars to close again, in a setback to the budding recovery that had been propelling risk assets.

Lockdown measures were also reimposed in Melbourne, Australia, confining its nearly 5 million residents to all but essential travel for another six weeks.

The move was announced just before the state border between Victoria, of which Melbourne is the capital, and New South Wales, which contains Sydney, is scheduled to close.

"Just when many parts of the world looked to have got to grips with the coronavirus pandemic, many jurisdictions re-imposed lockdowns to contain a surge in new cases," said Luca Paolini, chief strategist at Pictet Asset Management.

Corporate earnings are expected to fall by about 20% percent this year following the deepest recession in more than a century. Pictet expects a 30% to 40% slump.

"But that does not mean equity and corporate bond markets are due a sharp fall," Paolini said, predicting the U.S. Federal Reserve will inject another $1.3 trillion of stimulus this year and the European Central Bank will add another 1.1 trillion euros ($1.24 trillion).

The euro zone economy will drop into a deeper recession this year than previously thought and take longer to rebound, the European Commission forecast on Tuesday. France, Italy and Spain are struggling the most.

Expectations are for a record 8.7% slump, then a 6.1% recovery in 2021. In early May, the commission had forecast a 2020 downturn of 7.7% and a 2021 rebound of 6.3%.

Analysts said signals from the Chinese government through a state-sponsored journal on "fostering a healthy bull market", published on Monday, had helped the buying binge in Chinese shares.

The current China rally has echoes of the past, especially during 2007 and in 2015, which was largely driven by Chinese retail investors.

"Shades of John F. Kennedy's 'Ask not what your country can do for you' inauguration speech here and as close as you might get to a Chinese government 'put' as anything the Fed has done to date vis-à-vis the U.S. stock (and credit) markets," said Ray Attrill, head of FX strategy at NAB, in a research note.

A rebound in U.S. services in June, almost returning to pre-pandemic levels, had also helped to whet investors' risk appetite.

(Graphic: World's biggest stock markets since start of 2020, https://fingfx.thomsonreuters.com/gfx/mkt/gjnvwwkrovw/Pasted%20image%201594112037896.png)

TROUBLING TIMES

In the currency market, the Chinese yuan edged to its highest levels in nearly four months. The renminbi rose 0.1% to 7.0115 per dollar though it was a small-scale move compared to Monday's near 1% jump.

"The yuan is supported by the risk-on mood in the Chinese share market despite lingering uncertainties over the U.S.-China relations and an anticipated slow pace of recovery," said Ei Kaku, senior strategist at Nomura Securities.

Other major currencies were struggling as the dollar regained traction. The yen was flat at 107.41 to the dollar, the euro slipped back to $1.1275 and the Aussie dollar dropped 0.5% after headlines of Melbourne's lockdown..

Gold dipped but was still near an eight-year peak at $1,776 per ounce. Copper was weaker in London trading, having hit a five-month high as part of the China charge in Asia.

Oil prices were also struggling. Brent crude lost nearly 1% to $42.69 per barrel and U.S. West Texas Intermediate crude fell to $40.24.

With 16 U.S. states reporting record increases in new COVID-19 case in the first five days of July, according to a Reuters tally, there is renewed concern about demand for fuel in the world's biggest oil-consuming country.

Florida is reintroducing some limits on economic re-openings to grapple with rising cases. California and Texas, two of the most populous and economically crucial U.S. states, are also reporting high infection rates.

"There are a couple of things that we are seeing, and some of them are troubling and might suggest that the trajectory of this recovery is going to be a bit bumpier than it might otherwise," Atlanta Federal Reserve Bank President Raphael Bostic told the Financial Times.

The U.S. death toll from the coronavirus has now topped 130,000, Reuters calculations show.

(Graphic: Coronavirus and financial markets, https://fingfx.thomsonreuters.com/gfx/mkt/xegvbmbdkpq/Pasted%20image%201594123352010.png) (Graphic: Central banks' balance sheets to the rescue, https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdlnezvo/Pasted%20image%201593424971998.png)

Stocks stall but China charge rumbles on
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (18)
Jin News
Jin News Jul 07, 2020 8:51AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
These people should stop panicking and focus on practicing good hygiene, social distancing and put on masks when going out to work. Simple. Now get it done!
charles Anderson
charles Anderson Jul 07, 2020 7:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Governments have debt that will never be managed, companies have enormous debts that will bring more of them down in 2020 than already declared.  Unemployment is hovering at a level that only brings doom and gloom and wide spread poverty.  The only stop gap is the government money! ummm you say...the people receiving this money think ummm an election is in a very months we have an opportunity to vote ourselves free stuff like we just got last few months, free healthcare, free education, yeah!  Voters have now realized they have the power to vote themselves a free check.  America will collapse upon its own ______.  Insert any word you like, mine is Stupidity.
The Dictator Turtle
The Dictator Turtle Jul 07, 2020 7:22AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China produced the virus in a lab, spread it ans they also will be the first with the vaccine funny enough - they had it ready before the breakout. Their objective - the same as always, to becom number one.
Miguel Garcia
Miguel Garcia Jul 07, 2020 1:32AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China the best!
Dion Argueta
Dion Argueta Jul 07, 2020 1:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China was criticized for how they handled the Coronavirus at the beginning. Now supposedly they are handling it well !!!! ???? Who ever is putting China on a pedestal, please!!!!!! Think about it...
Plopseven Schwartz
Plopseven Schwartz Jul 07, 2020 1:28AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
No matter who started this, the United States response to it has shown fhe government only cares about making the rich richer and giving the poor the scraps.
perplexed76 .
perplexed76 . Jul 07, 2020 12:45AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The West hopes on China. China hopes on the West.
David Wang
David Wang Jul 07, 2020 12:41AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The evil Chinese commie regime exported the virus with misleading info and fake data, destroyed the world job markets and people's live. Now this regime is exporting fake financial data to mislead the world financial markets, aiming to form a bubble to destroy the financial order and markets of the world. Fake chinese data and fake recovery, as part of the evil regime propaganda to enhance their ruling sell their ideology.
Joe Gamma
Joe Gamma Jul 07, 2020 12:33AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Oil price will prompt single digits going forward. To much oil and a structural shift in demand is already in play.
Vv Pp
Vv Pp Jul 07, 2020 12:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
We should learn all from the Red Giant !!
Miguel Garcia
Miguel Garcia Jul 07, 2020 12:25AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes.
Rob Fordham
Rob Fordham Jul 06, 2020 11:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why are soo many people so angry about everything? Market goes up and they say its all fake. Market goes down and they say its all fake. Both cant be true
eddie glass
eddie glass Jul 06, 2020 11:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
the market is just fake, in general
Indiana Jones
Indiana Jones Jul 06, 2020 11:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
We are witnessing what occurs when markets are not allowed to float based on free-market fundamentals, but are instead being manipulated by governments. I think we can trust the US Fed, but there’s decreasing incremental returns on their axtions. As for trusting the Chinese government in markets (currrency, and now equity), its actions are highy suspect as it seeks to become more independent from the US. .
perplexed76 .
perplexed76 . Jul 06, 2020 11:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
when markets go down because of bad things happening, nobody says it's fake.
Jin News
Jin News Jul 06, 2020 11:26PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Profit taking , but let's make it more exciting by blaming in in the virus
Kenny Venezia
Kenny Venezia Jul 06, 2020 11:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It's a good thing someone created the word HOPE, because It's been the only thing keeping the world markets from being flushed down the crapper. I wonder much longer that wors will mean anything
Lakshmana Reddy
Lakshmana Reddy Jul 06, 2020 10:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
China fake news, they can fake anything
Jack Zhang
Jack_A Jul 06, 2020 10:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
even your TV, your phone, your pants, etc.
Vv Pp
Vv Pp Jul 06, 2020 10:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
haha best comment 👍
Pamp da Stonks
Pamp da Stonks Jul 06, 2020 10:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They didn't get the dump notice#FED_BUBBLE #BOJ_BUBBLE
Robert DZ the patterns
Robert DZ the patterns Jul 06, 2020 9:36PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gina hopes, is that serious? Or a joke?
Musical Critic
Musical Critic Jul 06, 2020 9:33PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Of course, parasites will follow! What else are they feeding upon?
John Patrick
John Patrick Jul 06, 2020 9:30PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Upbeat data? which planet is the guy writing this article from?
Simon Liu
Simon Liu Jul 06, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It is not "to follow U.S.", but is to follow China. The world is changing. U.S. needs to follow China on controling the COVID-19, for the best sake of its people.
Biji Rajaku
Biji Rajaku Jul 06, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
But it is contagious from China and have raised concern that Wuhan must be responsible to people around the world.
Alan Kaid
umadbro Jul 06, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Biji Rajaku would you feel the same way if the virus originated in your city?
Katrina Zarkova
Katrina Zarkova Jul 06, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
they got plenty
GJ DJT
GJDJT Jul 06, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Spanish flu originated from USA, so as 2009 swine flu.
Ronald Warren
Ronald Warren Jul 06, 2020 9:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Tell it like it is. Artificial intelligence is pumping the market before earnings next week burn it down. That way we get a break even. No red this week.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email