Stock markets mostly down as new virus cases temper reopening

HONG KONG (AFP) – Markets mostly fell yesterday as investors kept a nervous eye on a spike in virus infections around the world, while Europe pressed ahead with the easing of lockdown measures.

A wall of cash from governments and central banks around the world also continues to provide much-needed support, though observers said an equities rally from their March trough may have been overcooked.

But after enjoying a broadly positive week, traders turned cautious on news of a worrying jump in fresh cases in several American states including California, Texas and Florida, while China, Australia, Germany and Japan are also battling new outbreaks.

That comes after the World Health Organization (WHO) last week warned of a “new and dangerous phase” of the COVID-19 pandemic, with people tiring of lockdowns despite the disease’s accelerating spread.

United States (US) investors were spooked on Friday when Apple said it would shut some stores it had recently reopened because of new cases.

Currency traders watch the computer monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul. PHOTO: AP

At the same time, though, European countries are slowly emerging from their economy-sapping lockdowns, with Spain opening its borders, welcoming flights, while schools, cinemas and theatres reopened in France.

“Global stocks are finding support (in) that for now, rising daily COVID-19 cases are staying local and failing to have a global impact. So investors can take some solace in that,” said Stephen Innes at AxiCorp.

“What is vital for the economy is whether governments re-impose wide-sweeping lockdowns. With the overall count low globally, that’s unlikely, whereas proximity or soft lockdowns like in Beijing is more likely.”

But he did say that the fresh infections are “providing a sombre reality check, not only thwarting bullish ambitions, but investors are re-focussing on the negative economic consequences that could linger for some time”.

Hong Kong dipped 0.7 per cent following reports that China will set up a “national security agency” in the city to oversee a controversial security law, which is said to override any existing legislation in the city. The bill has raised fears it will end the financial hub’s limited freedoms.

Tokyo lost 0.2 per cent and Shanghai ended down 0.1 per cent, while Seoul shed 0.7 per cent and Wellington dropped 0.9 per cent. Bangkok and Jakarta were also down, with Sydney flat.

But Mumbai rose along with Taipei, Singapore and Manila.

London fell one per cent, while Paris and Frankfurt were down a little more.

“With Germany widely lauded for its swift coronavirus response, both from a fiscal as well as a medical standpoint, countries across Europe will now be nervously glancing in its direction as authorities there grapple with this resurgence, over concerns it could ripple out beyond its borders and threaten the re-opening plans,” said CMC Markets analyst Michael Hewson.

Oil prices dipped after a healthy advance on Friday, as output cuts by major producers and hopes for rising demand are tempered by worries over new infections.