World stocks skid as new coronavirus cases rattle markets

BANGKOK (AP) — World shares and United States (US) futures slipped yesterday as investors focussed on surging new coronavirus cases in the US that are dimming hopes for a relatively quick economic turnaround from the pandemic downturn.

Germany’s DAX lost 0.9 per cent to 11,985.92 while the CAC 40 in Paris tumbled 1.5 per cent to 4,799.54. London’s FTSE gave up 1.2 per cent to 6,050.02. The future for the S&P 500 lost 1.3 per cent to 3,008.20 while the future for the Dow industrials was down 1.4 per cent at 25,037.00.

A rise in new infections is stoking worries that reopenings of businesses closed earlier to fight the pandemic may have to be curtailed, despite indications that economies are recovering from lockdowns that are being eased in the US and other countries.

“Financial markets had the chance to reassess some of the great expectations that have underlined the asset price rally since Mid-March,” Jeffrey Halley of Oanda said in a report.

Talk of reimposing shutdowns in the US has gotten investors’ attention, he said. “More concerning for the US, is that this is not even the dreaded ‘second wave’ of infections, merely an ongoing evolution of the first one.”

People walk by an electronic stock board of a securities firm in Tokyo. PHOTO: AP

Tokyo’s Nikkei 225 slipped 1.2 per cent to 22,259.79 and the Kospi in Seoul lost 2.3 per cent to 2,112.37. India’s Sensex lost 0.8 per cent to 34,591.33.

Markets in Hong Kong, Taiwan and Shanghai were closed for holidays. Markets fell in Southeast Asia, with Bangkok’s SET index losing 1.5 per cent.

Australia’s S&P/ASX 200 sank 2.5 per cent to 5,817.70 after its biggest airline, Qantas, announced it plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs to survive the coronavirus pandemic.

Overnight, the S&P 500 fell 2.6 per cent to 3,050.33, giving back all of its gains for the month. The selling accelerated on news that New York, New Jersey and Connecticut will require visitors from states with high infection rates to quarantine for 14 days.

“A huge problem for investors is that volatility is too expensive to buy right now, so they are finding it easier just to cut and run from their stock market positions,” Stephen Innes of AxiCorp said in a commentary.

On top of lingering concerns over trade tensions between the US and China, reports said the White House is considering fresh tariffs on USD3.1 billion worth of exports from France, Germany, Spain and Britain. That helped send markets tumbling on worries that such a move might spiral into another trade war, said Jingyi Pan of IG.

Despite shedding its gains for June, the S&P 500 still is on pace for its best quarter since the fourth quarter of 1998.

The market had been mostly in rally mode since April as investors focussed on the prospects for an economic turnaround as broad areas of the economy reopened. But the recent surge in new infections undercut that optimism.

While early hot spots like New York and New Jersey have seen cases steadily decrease, the virus is slamming the south and west, with several states setting single-day records, including Arizona, California, Mississippi, Nevada and Texas.

The yield on the 10-year Treasury note fell to 0.67 per cent from 0.69 per cent on Wednesday. It tends to move with investors’ expectations for the economy and inflation.

In energy trading, benchmark US crude oil fell 55 cents to USD37.46 per barrel in electronic trading on the New York Mercantile Exchange. It slid 5.8 per cent to settle at USD38.01 a barrel on Wednesday.

Brent crude, the international standard, gave up 49 cents to USD40.04 per barrel. It fell 5.4 per cent to close at USD40.31.

In currency dealings, the dollar bought JPY107.07, rising from JPY107.05. The euro slipped to USD1.1241 from USD1.1252.