AP – World stocks fell back yesterday after an overnight comeback by big technology shares that have thrived during the pandemic.
Excitement over news of potentially effective vaccines for COVID-19 has been tempered by concerns over the logistical challenges of ensuring access to billions of people. Meanwhile, caseloads are rising, leading governments to re-instate restrictions on business and other activities to battle the pandemic.
“Vaccine trades reversed to give way to ‘stay home’ trades”, as shares of technology companies and others that do well when people stay home and work remotely rallied, Mizuho Bank said in a commentary. But it added, “Fact of the matter is, progress on vaccine development is at worst two steps forward one step back, and not one step forward and two steps back on a sustained basis.”
Germany’s DAX lost 0.8 per cent to 13,104.87 and the CAC 40 in Paris declined 0.9 per cent to 5,393.76. In Britain, the FTSE 100 gave up 0.6 per cent to 6,342.53. On Wall Street, the future for the S&P 500 slipped 0.6 per cent while the contract for the Dow industrials lost 0.7 per cent.
In Asian trading, Tokyo’s Nikkei 225 index gained 0.7 per cent to 25,520.88 despite a report that machinery orders fell in September, suggesting weakness in corporate investment. The benchmark has been trading near 30-year highs despite a resurgence of COVID-19 cases that has officials urging people to stay home over the holidays.
The mood was more somber elsewhere in the region.
Hong Kong’s Hang Seng index fell 0.2 per cent to 26,169.38 and the Shanghai Composite index declined 0.1 per cent to 3,338.68. In Seoul, the Kospi shed 0.4 per cent to 2,475.62. Australia’s S&P/ASX 200 slipped 0.5 per cent to 6,418.20.
Chinese technology shares have taken a beating this week, losing about USD290 billion in market capitalisation after the government issued new proposed anti-trust regulations for digital industries, said Jeffrey Halley of Oanda.
Overnight, the Dow Jones Industrial Average edged 0.1 per cent lower, to 29,397.63, falling back on news that New York would put restrictions on bars, restaurants and gyms as COVID-19 infections rose in the state.
The S&P 500 rose 0.8 per cent, to 3,572.66 and is just eight points below the record high it set in September. The technology-heavy Nasdaq composite rose two per cent, to 11,786.43.
Investors have embraced hopes that one or more coronavirus vaccines could help corral the virus by the second half of next year, encouraging people to return to life as it was before the pandemic.
All that economic activity would come on top of the tremendous aid that the Federal Reserve and other central banks around the world are pumping into the economy through very low interest rates and massive purchases of bonds. Hope also remains that the United States (US) government may eventually deliver some form of support for the economy, though its total size would likely be smaller than if Democrats had swept this month’s elections.
Wall Street strategists have been raising their forecasts for stock prices on expectations that political control of Washington will remain split between the parties. Republicans look set to keep the Senate, as long as runoff elections go their way in Georgia in January, while Democrats will hold the House of Representatives.
Democrat Joe Biden has clinched enough electoral votes to win the White House, clearing some of the uncertainty that weighed on the market through the vicious campaign. Investors are looking past President Donald Trump’s refusal to concede and assuming that a split Washington under Biden could keep tax rates low while offering more steady and predictable policies.
In other trading, benchmark US crude oil picked up 17 cents to USD41.62 per barrel in electronic trading on the New York Mercantile Exchange. It climbed nine cents to USD41.45 on Wednesday. Brent crude, the international standard, added 16 cents to USD43.97 per barrel.
The US dollar weakened to JPY105.32 from JPY105.42. The euro climbed to USD1.1786 from USD1.1776.