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Global stocks slip as virus outbreaks dim hopes for rebound Wall Street slips as virus outbreaks dim rebound hopes
(about 5 hours later)
TOKYO — Global shares were mostly lower Tuesday 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. U.S. stocks are falling in early trading Tuesday as expanding coronavirus outbreaks dim hopes for a speedy recovery. The S&P 500 and Dow Jones Industrial Average followed benchmarks in France, Germany and Britain lower after the European Union slashed its forecasts for economic growth in 2020. Investors worry that recovery from the global recession and the lockdowns on businesses will take longer than expected. Stocks also fell in Tokyo, Seoul and Hong Kong, while the Shanghai Composite index advanced. Precious metals and crude oil prices also fell, as did the 10-year Treasury yield.
France’s CAC 40 dipped nearly 1.0% in early trading to 5,031.31, while Germany’s DAX slipped 1.1% to 12,594.07. Britain’s FTSE 100 dropped 1.0% to 6,220.44. U.S. shares were set to drift lower with Dow futures falling 0.9% to 25,944.0. S&P 500 futures were also falling, down 0.7% at 3,148.88. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Government stimulus and hopes for an economic turnaround have kept investor sentiment upbeat, Prakash Sakpal and Nicholas Mapa, senior economists at ING, said in a report. But pandemic uncertainties are looming, and the situation is fragile. World stock markets were mostly lower Tuesday as spreading coronavirus outbreaks dimmed hopes for a global recovery, despite an overnight rally in tech shares that pushed the Nasdaq to another record high.
The EU executive meanwhile lowered its forecasts for economic growth this year and predicted a slower rebound in 2021, highlighting how the recovery from the global recession and the lockdowns on business will take longer than expected.
U.S. shares were set to drift lower, with Dow futures falling 0.9% and S&P 500 futures sliding 0.8%. In Europe, France’s CAC 40 fell 0.9% to 5,035, while Germany’s DAX slipped 1.1% to 12,598. Britain’s FTSE 100 dropped 1.2% to 6,210.
Government stimulus and hopes for an economic turnaround have kept investor sentiment upbeat recently, Prakash Sakpal and Nicholas Mapa, senior economists at ING, said in a report after the Nasdaq hit a record. But pandemic uncertainties are lingering, and the situation is fragile.
“Investors continue to look past the sustained pickup in new infections in the southern part of the U.S. as well as other parts of the world like Israel, but a sustained influx of downbeat reports could change sentiment,” their report said.“Investors continue to look past the sustained pickup in new infections in the southern part of the U.S. 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% to finish at 22,614.69 and South Korea’s Kospi gave up 1.1% to 2,164.17. Australia’s S&P/ASX 200 was little changed, edging less than 0.1% lower to 6,012.90. Hong Kong’s Hang Seng shed 1.5% to 25,946.86, while the Shanghai Composite gained 0.4% to 3,345.34.In Asian trading, Japan’s benchmark Nikkei 225 dropped 0.4% to finish at 22,614.69 and South Korea’s Kospi gave up 1.1% to 2,164.17. Australia’s S&P/ASX 200 was little changed, edging less than 0.1% lower to 6,012.90. Hong Kong’s Hang Seng shed 1.5% to 25,946.86, while the Shanghai Composite gained 0.4% to 3,345.34.
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. Market sentiment took a hit after the executive body of the 27-nation EU said the bloc’s economy is forecast to contract 8.3% this year, before growing 5.8% in 2021. In the previous forecasts released in May, GDP was forecast to contract about 7.5% this year and to bounce back 6% next year.
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. Industrial production in Germany rebounded in May, but less than expected and remains far below levels from before the pandemic caused factories to close.
Profit-taking set in quickly on Tuesday, erasing much of an initial rise for regional benchmarks that tracked Wall Street’s rally. While investors have focused on hopes for a robust bounce back in the global economy, the worry is that pandemic will continue worsening, with hotspots stretching across the U.S. South and West. Cities in major economies like Australia and Britain have seen pockets of new contagions, requiring new lockdown measures. That trend is likely to keep shoppers and businesses from spending.
They’re the latest buoyant moves for markets where investors are focusing 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 worst-case scenario for markets is that governments resume more widespread 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.
The worry is that if the pandemic keeps worsening, with hotspots stretching across the U.S. South and West, it could scare shoppers and businesses away from spending. Benchmark U.S. crude oil lost 42 cents to $40.21 a barrel. It fell 2 cents to $40.63 a barrel Monday. Brent crude oil for September delivery fell 35 cents to $42.75 a barrel.
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. The dollar rose to 107.71 Japanese yen from 107.37 yen. The euro inched down to $1.1291 from $1.1309.
Benchmark U.S. crude oil lost 54 cents to $40.09 a barrel. It fell 2 cents to $40.63 a barrel Monday. Brent crude oil for September delivery fell 52 cents to $42.58 a barrel.
The dollar rose to 107.58 Japanese yen from 107.37 yen. The euro inched down to $1.1286 from $1.1309.
Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.