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Stocks adrift as vaccine rally falters; gold and bonds rise

Stock Markets May 20, 2020 02:05AM ET
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© Reuters. A passerby wearing a protective face mask, following an outbreak of the coronavirus, walks past an electronic board showing the graphs of the recent movements of Japan's Nikkei share average outside a brokerage in Tokyo
 
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By Tom Westbrook

SINGAPORE (Reuters) - Asian stocks struggled to extend the week's rally on Wednesday, and gold and bonds firmed, as a sceptical press report dented some hopes for a COVID-19 vaccine and concerns about the global recovery from the pandemic returned.

MSCI (NYSE:MSCI)'s broadest index of Asia-Pacific shares outside Japan was flat. The risk-sensitive Australian dollar retreated from a two-month high struck on Tuesday and safe-haven demand drove U.S. Treasury yields back under 0.7%.

European futures were subdued with FTSE futures and EuroSTOXX 50 futures down 0.3%. S&P 500 futures rose 0.6%.

The drift follows a downbeat end to Tuesday trade on Wall Street after a report from medical news website STAT cast doubt over encouraging early results from a Moderna (NASDAQ:MRNA) Inc COVID-19 vaccine trial.

The report said the results, which had rallied global stocks this week, lacked detail.

"This is probably more a stabilisation than anything else, because markets have rallied hard on opening up and the potential for a V-shaped recovery," said Jun Bei Liu, a portfolio manager at Australia's Tribeca Investment Partners.

"The market is a little bit directionless," she said, with investors waiting to take their next cues from company outlook commentaries and confidence surveys.

Two thirds of 223 fund managers surveyed by Bank of America (NYSE:BAC) reckon recent gains are a bear-market rally.

Around Asia, the Chinese yuan and stocks in Hong Kong and China idled just under flat as investors wait to hear the government's economic plans, due to be announced during the annual gathering of parliament beginning on Friday.

Australian shares ground higher and Japan's Nikkei rose 1%, helped by a softer yen and anticipation that declining infection rates will make a case for swift economic re-opening.

Oil was steady and benchmark 10-year yields on U.S. Treasuries dipped 1.5 basis points to 0.6948%. Yields fall when prices rise.

Gold rose slightly to $1,745.84 per ounce.

WOBBLY RECOVERY

Doubts about the outlook held back commodity prices from further gains, as more bad news poured forth.

Japanese business confidence slumped to a decade low as the economy entered recession while Australian retail sales suffered their steepest ever dive in April. British jobless claims are at their highest in 20 years.

And the U.S. economy won't recover its lost ground until sometime after next year, the non-partisan Congressional Budget Office said on Tuesday.

Brent crude futures rose about 1% a barrel to $34.93 and U.S. crude rose 0.7% to $32.17.

"While countries have started to relax restrictions on economic and social activities, economies will not return to where things were before the outbreak," said strategist at Singapore's DBS bank in a note.

"Geopolitical tensions, especially between the U.S. and China, have also returned and are likely to intensify into the U.S. elections in November."

In currency markets the euro remained supported in the afterglow of a Franco-German proposal for a common relief fund - a possible way through tensions between European Union members. It inched up to $1.0940.

Other majors steadied, while the Aussie and kiwi battled, mostly without success, to break out of the ranges that have held them for months.

Stocks adrift as vaccine rally falters; gold and bonds rise
 

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Comments (19)
Darren Hunt
Darren Hunt May 20, 2020 5:54AM ET
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"VACCINE RALLY RESUMES " new headline. there you go your new headline
Darren Hunt
Darren Hunt May 20, 2020 5:46AM ET
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so spy is almost back to yesterdays highs and this headline that's 3hrs old doesnt seem to apply now. what will you come up with before open?
Paul Dunne
Paul Dunne May 20, 2020 3:20AM ET
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It seems like most people are reading the tabloid hype and social media and no one is reading Lancet and other medical journals?
Mark Bench
Mark Bench May 20, 2020 2:32AM ET
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It's just a gang of degenerate gamblers and fed hopium holding things up for now. This house of cards is a beauty.
Brandon Son
Brandon Son May 20, 2020 2:32AM ET
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don't worry my friend it will all collapse and we will have the last laugh
Paul Schumi
Philo2 May 20, 2020 2:13AM ET
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HA! Monday early it was ‘Cure Hopes’....now it was a ‘vaccine rally’...pure comedy.
John Smit
John Smit May 20, 2020 1:19AM ET
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'vaccine rally falter' - HAHAHAHAHA. Hilarious, vaccine rally. Unbelievable the nonsense that people will listen too. A 'vaccine rally' - are you kidding me!
Sam Crowther
Sam Crowther May 20, 2020 12:55AM ET
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Has anyone ever stopped to think that in 150 years of market data we are still in an upward positive trend...never the less to mention that our technological and scientific advancement is extraordinarily perpetual...everything is so cyclical but yet shorts and bearish mentality cant unhinge themselves from their dramatized life style
Tricky Dick
TrickyDick May 20, 2020 12:55AM ET
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yeah let's ban those mean short sellers, they really wreck the fun
Jeff Bauman
Jeff Bauman May 20, 2020 12:55AM ET
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Yeah! I mean, double digit unemployment into next year won't have a negative effect on the economy. right?
Brandon Son
Brandon Son May 20, 2020 12:42AM ET
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perfect example of "buy the rumor sell the fact"
Sergio Marin
Sergio Marin May 20, 2020 12:15AM ET
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Adrift = Green 🤔
Jeff Bauman
Jeff Bauman May 20, 2020 12:15AM ET
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adrift = no direction.. get a clue
Chris Sundo
Chris Sundo May 19, 2020 11:51PM ET
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''While countries have started to relax restrictions on economic and social activities, economies will not return to where things were before the outbreak," said a strategist at Singapore's DBS Bank in a note.'' -- I wonder how old the ingredients in this article are. Maybe the strategist said this months ago and it gets only now released when the market needs a pullback. I can't imagine a bank strategist saying this kind of very old news at this time. The strategist wrote this wisdom in a note .. They could have asked ME and I could have told them the same in mid-march. Goes to show how fake the news is here .. shaking my head
Chris Sundo
Chris Sundo May 19, 2020 11:51PM ET
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The strategist's emphasis was on ... ''economies will not return to where things were before the outbreak..''  regardless of when the relaxing of restrictions and the reopening were happening. Therefore my comment above is not invalidated: because the jist of not returning to the same normal before the virus: anyone could have foreseen by mid-March what the strategist put into the note.
 
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