Left Menu
Development News Edition

GLOBAL MARKETS-Global shares begin H2 with a whimper despite positive data

Global stocks struggled for momentum on Wednesday as improving economic data was offset by concern that surging coronavirus cases in the United States could derail the world's recovery before it properly begins. Germany's manufacturing sector contracted at a slower pace in June, while French factory activity rebounded into growth, data showed.

Reuters | Updated: 01-07-2020 14:47 IST | Created: 01-07-2020 14:00 IST
GLOBAL MARKETS-Global shares begin H2 with a whimper despite positive data
Representative Image Image Credit: ANI

Global stocks struggled for momentum on Wednesday as improving economic data was offset by concern that surging coronavirus cases in the United States could derail the world's recovery before it properly begins.

Germany's manufacturing sector contracted at a slower pace in June, while French factory activity rebounded into growth, data showed. German retail sales rose sharply in May, reflecting a rebound in private consumption, while a recovery in China's factory activity offered further signs that the world's second-largest economy may have passed the worst of the devastation caused by the pandemic.

Germany's jobless rate rose by 69,000 in June, far less than expected. Economic institute Ifo said Europe's largest economy will gradually recover after the slump caused by the pandemic and will likely return to last year's level at the end of 2021. Coronavirus cases surged, with the United States recording 47,000 infections on Tuesday, its biggest single-day spike since the pandemic began.

MSCI's world shares index was 0.1% higher after rising 18% for its biggest three-month gain since 2009 in the second quarter, but it still closed the first half around 8% lower from where it started the year. After their best quarter since March 2015, European stocks opened firmer, with the broader Euro STOXX 600 gaining 0.3%.

"We are at the beginning of the quarter but it doesn't look very different from where we left the last one," said François Savary, chief investment officer at Swiss wealth manager Prime Partners, predicting "a further consolidation over the summer." MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, led by gains in China. E-Mini futures for the S&P 500 were down 0.2%.

It followed a strong finish to the quarter on Wall Street but also a loss of momentum in recent weeks as U.S. infection rates have surged, with some states reimposing restrictions on business and personal activity. The S&P 500 index rose 1.5% for an almost 20% gain over the past three months, fuelled by unprecedented central bank stimulus and hopes for a swift pandemic recovery, but it rose only 1.8% in June.

Coronavirus cases more than doubled in 14 U.S. states last month, a Reuters analysis showed, and fears are growing that the caseload could prompt fresh lockdowns. "The rise in COVID-19 infections is now triggering a reversal on the reopening strategy," said Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney. "It remains to be seen if the U.S economy will continue to surprise over the coming month."

The U.S. government bond market remains in a cautious mood. Yields on benchmark 10-year government debt rose overnight to 0.6774% but finished the quarter steady. In Europe, Germany's 10-year yield rose to a one-week high, rising 2 basis points on the day to -0.44, helped by better than expected German retail sales.

UNWELCOME DEVELOPMENTS China's introduction of sweeping new laws to crackdown on dissent in Hong Kong also has investors eying geopolitical tensions with trepidation.

The laws have prompted fresh protests in the city and Washington has begun dismantling Hong Kong's special status under U.S. law. "It's one of a number of geopolitical factors which is a negative for some asset classes now," said Imre Speizer, a foreign-exchange strategist at Westpac in Auckland.

Currency markets were in a holding pattern before the next slew of data due to provide a snapshot of the U.S. recovery. The dollar rose overnight but edged back down in early London trading, before U.S. manufacturing PMI and unemployment data. The euro was broadly flat on the day, at $1.12275.

U.S. manufacturing activity data on Wednesday is forecast to show a recovery from an 11-year low in April while the non-farm payrolls report on Thursday is expected to show the economy added 3 million jobs in June. Gold hovered near an 8-year high at $1787.86 an ounce.

Brent crude rose 2.5% to $42.32 a barrel, while U.S. crude was up 2.7% at $40.31 a barrel after an industry report showed crude stockpiles in the U.S. staged a bigger drop than expected.


TRENDING

OPINION / BLOG / INTERVIEW

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...

COVID-19: Weighing up the benefits and limitations of edtech platforms

Edtech companies shouldnt focus on merely pushing contents, but to provide an interactive, effective teaching and learning environment. ...

Videos

Latest News

Mexico's coronavirus death toll surpasses 30,000

Mexicos health ministry on Saturday reported 523 more deaths from the novel coronavirus, bringing the total to 30,366, and 6,014 of new infections, bringing the total to 252,165. The government has previously said the actual number of infec...

Gen.G rally past Liquid to reach cs_summit 6 - NA final

Gen.G Esports used a big rally to sink Team Liquid in the lower-bracket final on Saturday and reach the grand final at the cssummit 6 Online North America event. Already down a map and trailing 10-6 on the second, Gen.G fought back for a 2-...

Croats go to polls amid sharp economic downturn, rising infections

Some 3.85 million Croats are eligible to go to polls on Sunday to elect a new government at a time when coronavirus infections are on the rise and the economy is facing a sharp downturn.Polling stations will open at 0500 GMT and close at 17...

Reuters US Domestic News Summary

Following is a summary of current US domestic news briefs. U.S. sends carriers to South China Sea during Chinese drillsTwo U.S. aircraft carriers were conducting exercises in the disputed South China Sea on Saturday, the U.S. navy said, as ...

Give Feedback