Global stocks slip as virus outbreaks dim hopes for rebound

TOKYO (AP) — Global shares were mostly lower yesterday as expanding coronavirus outbreaks dimmed hopes for a global recovery, despite an overnight rally in tech shares that pushed the Nasdaq composite to another record high.

France’s CAC 40 dipped nearly 1.0 per cent in early trading to 5,031.31, while Germany’s DAX slipped 1.1 per cent to 12,594.07. Britain’s FTSE 100 dropped 1.0 per cent to 6,220.44. United States (US) shares were set to drift lower with Dow futures falling 0.9 per cent to 25,944.0. S&P 500 futures were also falling, down 0.7 per cent at 3,148.88.

Government stimulus and hopes for an economic turnaround have kept investor sentiment upbeat, senior economists at ING Prakash Sakpal and Nicholas Mapa said in a report. But pandemic uncertainties are looming, and the situation is fragile.

“Investors continue to look past the sustained pickup in new infections in the southern part of the US as well as other parts of the world like Israel, but a sustained influx of downbeat reports could change sentiment,” their report said.

In Asian trading, Japan’s benchmark Nikkei 225 dropped 0.4 per cent to finish at 22,614.69 and South Korea’s Kospi gave up 1.1 per cent to 2,164.17. Australia’s S&P/ASX 200 was little changed, edging less than 0.1 per cent lower to 6,012.90. Hong Kong’s Hang Seng shed 1.5 per cent to 25,946.86, while the Shanghai Composite gained 0.4 per cent to 3,345.34.

A man walks past a bank’s electronic board at Hong Kong Stock Exchange. PHOTO: AP

The fallout from the pandemic has sent earnings plunging at many Asian companies, including giant Japanese exporters like Toyota Motor Corp. Their recovery is not expected until overseas consumption picks up.

Daily confirmed infection cases have not fallen in Tokyo, exceeding 100 in recent days. The Japanese government is still pushing for events and businesses to open gradually with social distancing restrictions in place to keep growth going.

Profit-taking set in quickly yesterday, erasing much of an initial rise for regional benchmarks that tracked Wall Street’s rally.

They’re the latest buoyant moves for markets where investors are focussing more on recent improvements in the economy and all the stimulus that central banks and governments are supplying than on how much pain still remains. Investors are also continuing to sidestep the mounting number of known coronavirus infections, at least for now.

The worry is that if the pandemic keeps worsening, with hotspots stretching across the US South and West, it could scare shoppers and businesses away from spending.

The worst-case scenario for markets is that governments resume lockdowns implemented during the spring and choke off the budding economic recovery. Either way, many economists expect it will take years for the global economy to return to the level of output it was at before the pandemic.

Benchmark US crude oil lost USD0.54 to USD40.09 a barrel. It fell USD0.02 to USD40.63 a barrel on Monday. Brent crude oil for September delivery fell USD0.52 to USD42.58 a barrel.

The dollar rose to JPY107.58 from JPY107.37. The euro inched down to USD1.1286 from USD1.1309.