Par Hideyuki Sano
TOKYO (Reuters) – Global stocks slipped on Wednesday as coronavirus infections rose at an alarming rate in the United States and Europe, while uncertainty over next week’s U.S. election added to a tone of “Risk of no”.
European stocks are expected to collapse amid reports of potential lockdowns in Germany and France, falling 1.3% to five-month low. Futures fell 0.5% to lows last seen in mid-May.
Futures on the US S & P500, Dow Jones and Nasdaq all fell 0.2-0.4%, rocked by a media report that the French government could implement a nationwide lockdown from midnight Thursday.
German newspaper Bild, meanwhile, reported that Chancellor Angela Merkel wanted to close all restaurants and bars and some other places from November 4 in order to fight the new infections.
The United States, Russia, France and other countries have seen record numbers of infections in recent days, and European governments have introduced new brakes.
Actions in Asia fared better, in part thanks to more limited COVID-19 outbreaks. fell 0.4% while the MSCI Ex-Japan Asia Index posted gains of 0.1% due to gains in China and South Korea.
“The relative strength of Japan and Asia clearly reflects a difference in coronavirus infections,” said Naoya Oshikubo, senior economist at Sumitomo Trust Asset Management.
The drop in US equity futures came after a mixed session on Wall Street, where the S&P 500 lost 0.30% on virus fears while high tech added 0.64%.
Microsoft (NASDAQ 🙂 kicked off a slew of tech heavyweight reports beating Wall Street estimates for quarterly revenue, backed by its flagship cloud computing company amid rising work-from-home deals. But its shares slipped 1.7% after the bell.
Apple Inc (NASDAQ :), Amazon.com (NASDAQ 🙂 and Google-parent Alphabet (NASDAQ 🙂 are among the major tech players reporting later this week.
MEMORY OF 2016
Investors avoided the risk with looming uncertainty, highlighted by the US presidential election on November 3.
While former Vice President Joe Biden enjoyed a steady lead over President Donald Trump, investors were wagering cautiously on his victory and possibly a “blue wave” outcome, where Democrats also take over the Senate. .
Still, the presidential race is closer in the battlefield states that could determine the outcome, leaving many investors on the edge.
“It looks like the gap between Biden and Trump is narrowing a bit lately. In particular, Biden’s lead in the Swing States doesn’t look that different from (Democratic candidate) Hilary Clinton in 2016, ”said Nobuhiko Kuramochi, market strategist at Mizuho Securities.
“People still remember the experience of 2016 and those who bet on a blue wave are probably taking profits now before the event,” he added.
The Wall Street Volatility Index, a measure of market expectations for stock price movements, rose to 33.35, its highest level in nearly two months.
Some market participants see this as a sign that more investors fear the election outcome may be challenged, possibly leaving markets in limbo for weeks.
This would likely further delay any negotiation over the economic relief plan that U.S. policymakers are struggling to agree on. Trump acknowledged that an economic back-up plan would likely come after the election.
In the currency market, the euro edged down on fears of a possible lock-up in France, trading at $ 1.1783, down 0.1%.
The safe haven yen gained 0.2% to 104.22 yen to the dollar, not far from its six-month high of 104 hit last month.
The yuan eased against the dollar after some banks changed a methodology to fix the daily midpoint of the yuan, a further sign that Beijing may try to slow a 6% rally in the Chinese currency since late May.
Investors also bought back US Treasuries, another safe haven asset, which lowered their yields.
The benchmark 10-year yield fell to 0.769%, down 1.2 basis points so far on Wednesday and well below its 4 1/2 month high of 0.872% reached on Friday.
Gold was little changed at $ 1,906.0 an ounce.
Oil prices gave up much of their gains made the day before as increased inventories and a surge in COVID-19 cases raised fears of oversupply of oil and weak demand for fuel.
At 5:50 a.m. GMT, was trading down 1.6% to $ 40.53 per barrel, while U.S. crude fell 2.1% to $ 38.75 per barrel.