Global markets: COVID recovery vs. COVID reality

LONDON (Reuters) – Global stocks stagnated near a four-month high on Friday and the metallic copper industrialist dragged on its longest weekly winning streak in nearly three years as coronavirus nerves persisted in the recent recovery.

FILE PHOTO: A street cleaning agent passes by the London Stock Exchange Group building in the City of London financial district, as British stocks fall as investors fear the coronavirus outbreak could stall the economy. Global, in London, Great Britain, on March 9, 2020. REUTERS / Toby Melville / File Photo

The market recovery, fueled by record numbers of jobs in the United States on Thursday, largely faded after a record daily total of new cases of COVID-19 in the United States, although news of the faster expansion in the China’s service sector in more than a decade held Asia’s tail early in the day.

Chinese stocks had been charged to their highest level in five years [.SS], which helped pan-Asian indices reach four-month peaks, so the sight of stagnant European markets left traders reeling, especially without Wall Street regaining things due to a holiday in the US market. [.EU]

The currency and commodity markets were also subdued after a strong week for confidence-sensitive stalwarts such as oil, copper, the British pound and the Australian dollar, which struggled on Friday.

More than three dozen US states are now seeing increases in COVID-19 cases, including Florida, where they have exceeded 10,000 a day. And although Europe is largely easing restrictions, some places have to maintain or re-impose them.

“I think infection rates and fears of localized blockages have quenched some of the excitement,” said Kit Jukes, strategist at Societe Generale.

“We have three elements now; hopes for vaccines, decent data in most places, but also the return of infection rates, which can make him nervous. ”

The London, Paris and Frankfurt stock markets fell 1.2%, 0.4% and 0.8%, respectively, as operations began to decline, although they all rose during the week. The euro and the pound were also fractionally lower, although it was barely noticeable thanks to the week’s second drop in the dollar.

The euro was at $ 1.1226 and, although it won against the safe Swiss franc, it fell against the red-hot Norwegian crown, which has been on the rise for months, in tandem with most currencies.

S&P 500 futures fell 0.2%, but volumes were low due to the Independence Day holiday in the US market.

Nonfarm payrolls for the United States the day before had shown a 4.8 million job increase well above what was forecast in June. It came largely thanks to increases in the affected hospitality sectors, although economists noted some caveats.

The number of permanent job losses continued to rise, increasing by 588,000 to 2.9 million, while the unemployment rate remains a gross 7.6 percentage points above its February level. An analysis by Deutsche Bank placed the unemployment rate of the United States behind all its peers in the developed market, except Canada.


The recovery faces headwinds as the surge in new coronavirus infections prompts US states to delay and, in some cases, reverse plans to allow stores and restaurants to reopen and activities resume.

BofA said in a report on Friday that $ 7.1 billion of capital funds had been withdrawn in the past week, and its closely watched ‘Bull & Bear’ indicator was out of ‘buy’ territory for the first time since 17 March.

However, investors seem to have overlooked the various spikes in the virus at least for now, and are of the opinion that things are still improving globally.

An indicator of market fear, the VIX volatility index, has seen its biggest drop in two months and German government bond yields were set for their biggest weekly increase in a month, although they fell to -0.44% on Friday.

However, the riskiest Italian yields also fell to 1.26%, which is its lowest level since the end of March, at the peak of Europe’s coronavirus blockade. [GVD/EUR]

Oil prices also declined after a solid week. Brent crude fell 0.65% to $ 42.86 per barrel, while US crude fell 0.66% to $ 40.38 per barrel. Both were around $ 25 this time two months ago.

Copper prices stood for the seventh consecutive weekly gain, its longest winning streak in nearly three years, although it was also slightly lower on the day at $ 6,040 per ton, more than $ 1,500 from the lows it reached in March. [/MET/L]

“The only problem looming over all markets is ‘Will we see an increase in secondary infections that will trigger a second wave of national rather than regional closings?'” Malcolm Freeman, director of Kingdom Futures, wrote in a note.

Chart: China’s recovery – here

Graphic: COVID-19 in the US – here

Report by Marc Jones; Editing by Kevin Liffey

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