World shares mixed after S&P 500 logs all-time high

Elaine Kurtenbach

AP – World share prices were mixed yesterday after the S&P 500 logged a fresh all-time high, with European indexes opening little changed and United States (US) futures slightly lower.

Germany’s DAX was flat at 12,877.33 and the CAC 40 in Paris also was virtually unchanged at 4,936.62. Britain’s FTSE 100 edged 0.2 per cent higher, to 6,085.95.

The future for the S&P 500 was flat while the future contract for the Dow industrials lost 0.1 per cent, suggesting the euphoria from the S&P 500’s new record might be short-lived.

Trade tensions between the US and Beijing are weighing on sentiment after US President Donald Trump said he had postponed talks a virtual meeting scheduled for last weekend because “I don’t want to deal with them right now”.

“I cancelled talks with China,” Trump said while out campaigning on Tuesday in Yuma, Arizona. The two sides had been overdue for consultations on progress on an agreement reached in January that brought a truce to a bruising tariff war over technology and other issues.

Hong Kong’s Hang Seng lost 0.9 per cent to 25,138.05 after the market opened late for a short session due to a tropical storm. The Shanghai Composite index sank 1.2 per cent to 3,408.13.

Japan’s Nikkei 225 index gained 0.3 per cent to 23,121.32 after the country reported its exports fell 19 per cent in July from a year earlier, better than expected and an improvement over a 26.2 per cent drop in June.

A man walks past an electronic stock board showing money exchange rates at a securities firm in Tokyo. PHOTO: AFP

An 8.2 per cent rise in exports to China, the first since early-2019, suggests the recovery there is helping offset weak demand in other markets, said Marcel Thieliant of Capital Economics.

The nearly 21 per cent decline in exports to the US was much better than the 50.6 per cent slump in May, with strong demand for technology allowing people to work from home helping sustain exports of computer chips and electrical machinery, he said. “But car exports, which were down 30 per cent year-on-year, remain Japan’s Achilles heel,” Thieliant said in a commentary.

Worries over trade tensions between the US and China, which threaten to further disrupt trade between the two largest economies, initially pulled the Shanghai Composite index lower but by early afternoon it was less than 0.1 per cent higher, at 3,452.38.

Tech stocks have stumbled recently amid worries that China could retaliate against US moves against network equipment maker Huawei, social media company ByteDance and other Chinese technology giants by targetting US chip makers and others.

The S&P/ASX 500 in Australia jumped one per cent to 6,182.40.

Overnight, Wall Street clawed back the last of the dizzying losses unleashed by the new coronavirus, as the S&P 500 picked up 0.2 per cent to 3,389.78, surpassing its previous record closing high of 3,386.15. It was set on February 19, before the pandemic shut down businesses around the world and knocked economies into their worst recessions in decades.

The S&P 500’s milestone caps a furious, 51.5 per cent rally that began in late March. The index, which is the benchmark for many stock funds at the heart of 401(k) plans, is now up nearly five per cent for the year.

The prolonged rally that has restored much of what was lost in the spring “has to be the most curious outcome ever witnessed in the annals of global markets,” Stephen Innes of AxiCorp said in a commentary.

“Given the immense issues of where the real economy sits as families struggle to put food on the table and fill up their cars with gas, not to mention we are nowhere near restoring pandemic economic losses as we are still adding those costs up,” he said.

The markets’ recovery is even more noteworthy considering prevailing uncertainties. COVID-19 continues to spread throughout the world, with more than 5.4 million known cases and 170,000 deaths in the US alone.

Despite the disconnect between the economy and the markets, investors appear to be reassured by the unprecedented support supplied by the Federal Reserve and Congress, which have plowed trillions of dollars into the economy to keep it from plunging even more deeply and to prevent a full-blown financial crisis.

Investors also are watching for signs that Congress and the White House might bridge their differences and agree on more aid to support the US economic recovery. The assumption that a recovery is coming is a big reason for the resilience in the markets.

Still, there are signs of skepticism. The yield on the 10-year Treasury dipped to 0.65 per cent from 0.67 per cent late Tuesday. In March, the yield had touched its record low just beneath 0.34 per cent. Last year, it was over one per cent.

In energy trading, benchmark US crude oil for September delivery lost 37 cents to USD42.52 per barrel in electronic trading on the New York Mercantile Exchange. It was unchanged at USD42.89 per barrel on Tuesday.

Brent crude, the international standard, lost 45 cents to USD45.01 per barrel. The US dollar bought JPY105.53, up from JPY105.46 on Tuesday. The euro slipped to USD1.1927 from USD1.1932.