Global Stocks Weaken as Virus Cases Rise
Global stocks edged lower on Wednesday. This is while the rise of COVID-19 cases in parts of the world weakened the possibility of a rapid rebound.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced, although it was still below the 4-1/2-month high on Tuesday. The index was last up by 0.5%.
Chinese equities extended their optimism to seven sessions. The blue-chip, CSI300, gained 1.6%, posting its highest close since June 2015.
Australian shares were down by 1.5% at the close due to renewed concerns over the coronavirus pandemic, following an increase in the number of cases in Melbourne.
Chief global market strategist Stephen Innes said it is impossible for investors not to grow weary and eventually, at some point, fall prey to the endless drip of negative Covid-19 stories and how the second-wave of the virus will crush the market.
New Zealand lost 0.3%, while South Korea’s KOSPI and Japan’s Nikkei 225 fell by 0.2% and 0.8%, respectively.
Meanwhile, in Europe, the Eurostoxx 50 shed 0.9%, while Germany’s DAX index slipped 0.8%. France’s CAC 40 lost 1.1%, while the UK’s FTSE 100 stumbled 0.4%.
E-mini futures for the S&P 500 rose by 0.1%. US stocks declined overnight after five straight days of gains registered by the benchmark S&P 500 index. That winning streak is the most enduring run in the year, and had a drive from positive economic figures.
Following the recent rally, the losses seem like a consolidation, with the markets mostly in wait and see mode ahead of the upcoming earnings session, according to economist Tapas Strickland. The second-quarter earnings season is due to start next week.
Quick Economic Recovery Uncertain on Growing COVID-19 Cases
COVID-19 cases in California climbed over 10,000 on Tuesday. This was a record growth for a single day. It also exceeded the number of contact tracers recently trained by the state to identify and prevent potential outbreaks.
It will be important to watch the number of US deaths in the coming weeks, and whether greater questions will be asked about the extent of necessary restrictions, Strickland stated.
The Australian state of Victoria also saw a surge in new cases. This lead to lockdown measures being reimposed in the country’s second biggest city.
The second wave of infections will see Victorian economic activity fall sharply, and it will continue to lag the rest of Australia, according to economist Kaixin Owyong, adding that Victoria accounts for about a quarter of economic activity in Australia.
Innes also said that despite the lack of market participation, it certainly feels like they are gradually morphing from the view of a fragile recovery to one of full-bore skepticism.
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