Global stocks mixed after weak US data add to global gloom

BEIJING (AP) — Global stocks were mixed yesterday after unexpectedly weak United States (US) retail and other data added to gloom about the impact of the COVID-19 pandemic.
Frankfurt and Shanghai gained while Tokyo and Hong Kong declined. London was
little-changed.

The future for Wall Street’s S&P 500 index edged up a day after the benchmark fell 2.2 per cent on news US retail sales and factory output plunged in March. The retail figures hit especially hard because consumer spending is two-thirds of the US economy.

The announcements shook investors who economists have warned are too optimistic about a quick rebound from what is shaping up to be the deepest global slump since the Great Depression of the 1930s.

“Boy, were US data a rude awakening,” said Riki Ogawa of Mizuho Bank in a report.

Any notion of a “V-shaped recovery” once anti-virus controls are lifted “is now being questioned more seriously,” Ogawa said.

Currency traders at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

In early trading, London’s FTSE 100 gained one point to 5,598.74 and Frankfurt’s DAX rose 1.3 per cent to 10,410.75. The CAC 40 in Paris added 1.1 per cent to 4,402.91.On Wall Street, the future for the S&P 500 index the Dow Jones Industrial Average was up 0.4 per cent.

On Wednesday, the Dow fell 1.9 per cent and the Nasdaq lost 1.4 per cent.

In Asia, Tokyo’s Nikkei 225 fell 1.3 per cent to 19,290.20 and the Hang Seng in Hong Kong lost 0.6 per cent to 24,006.45. Sydney’s S&P-ASX 200 lost 1.3 per cent to 5,397.60.

The Shanghai Composite Index gained 0.3 per cent to 2,819.94. Seoul’s Kospi ended unchanged at 1,857.07 after swinging between gains and losses.

India’s Sensex gained 1.1 per cent to 30,716.93. New Zealand’s main index added 0.6 per cent while Singapore gained and Thailand and Jakarta retreated.

The US retail sales decline exceeded the previous record decline of 3.9 per cent during the Great Recession in November 2008.

Auto sales dropped 25.6 per cent, while clothing store sales plunged 50.5 per cent.

Restaurants and bars reported a nearly 27 per cent fall in revenue.

Spending may be falling at an even faster pace than retail figures suggest. Those data don’t include spending on services such as hotel stays, airline tickets or movie theatres, industries that have been largely shut down by anti-virus controls.

Also Wednesday, the Federal Reserve Bank of New York said its gauge for manufacturing in New York state fell by its biggest monthly margin in April. The index is at its lowest level on record.

Traders say stocks will be volatile until investors can see more clearly when countries might be able to stop the outbreak.

Energy stocks took the sharpest losses after oil prices touched another 18-year low.

Global oil demand will fall this year by a record amount, the International Energy Agency
said Wednesday.

Benchmark US crude gained 39 cents to USD20.26 per barrel in electronic trading on the New York Mercantile Exchange. On Wednesday, the contract touched its lowest price since 2002 before recovering to USD19.87.

Brent crude, used to price international oils, advanced 58 cents to USD28.28 per barrel in London. It fell USD1.91, or 6.5 per cent, the previous session to USD27.69.

Investors are focussing on how and when authorities may begin to ease business shutdowns and limits on people’s movements.

US President Donald Trump has been discussing how to roll back federal social distancing recommendations. US governors are collaborating on plans to reopen their economies in what is likely to be a gradual process to prevent the COVID-19 from rebounding.

China has reopened factories, shops and other businesses after declaring victory over the outbreak, but forecasters say it will take months for industries to return to normal output, while exporters will face depressed global demand.

With millions of job losses worldwide, “the more lasting damage to confidence and labour market shocks is also being under-estimated, and these may not recover in tandem with the pandemic,” said Mizuho’s Ogawa.

The dollar advanced to JPY107.72 from Wednesday’s JPY107.43. The euro fell to USD1.0889 from USD1.0911.