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LONDON: European stock markets regained some ground on Tuesday, a day after the second rising wave of the coronavirus epidemic caused the region’s worst destruction since June and forced investors to turn to government bonds.
Conditions were still choppy with South Korea and China sliding down to Asia for a second day and the tech-heavy Nasdaq now out of its recent stellar range, so it was a relief for traders to see European and US futures turn. stabilized.
The pan-European STOXX 600 Index recovered 0.5 percent from the 3.2 percent it lost on Monday, helped by the respective gains of 1 percent and 1.3 percent for the technology and auto sectors that offset the ups and downs. in other places.
Travel and leisure stocks were down 0.3% to add to Monday’s 5.2% drop, and S&P futures were also slightly weaker. As investors stayed close to safety, Germany’s government bond yields stayed near six-week lows and the dollar rose.
“The market may be taking a breather, but I would be surprised if that was it,” said Elwin de Groot, Rabobank’s head of macro strategy, referring to Monday’s defeat that came when countries were forced to reintroduce some of the COVID-19 restrictions. They took off during the summer.
“The market will not like it. The base case was that the second wave would not be as bad as the first … but the fourth quarter will now be another quarter with strict restrictions and there will be a growing number of economic victims,” he said.
Concerns had arisen in the currency market, with both the euro and the British pound falling as much as 0.3% against the dollar.
UK Prime Minister Boris Johnson told Britons on Tuesday to return to work from home, along with new restrictions on pubs, bars and restaurants that he said could be in place for up to six months without some form of COVID vaccine. .
This came as France saw its rolling seven-day case count above 10,000 for the first time over the weekend, Madrid had called in the army, Italy introduced more mandatory testing, and Germany described the situation as “worrying.”
Beyond the impact of the virus, the Hong Kong shares of HSBC and Standard Chartered had weakened a further 2%, after leaked reports showed they were among the global lenders who have transferred more than $ 2 trillion in shady funds. for almost two decades.
“Markets globally have raced under the weight of huge liquidity, so it is not surprising to see a pullback in some valuations,” said James Rosenberg, a consultant at EL&C Baillieu in Sydney.
“Add uncertainty with the US elections and another wave of COVID in Europe … that makes investors uneasy.”
TECHNICAL TEST
Wall Street’s pre-market winners included Microsoft, Apple, Amazon and Alphabet, all of which have dominated the global market rebound from its coronavirus-driven slide in March.
However, Tesla skidded 3.4% after CEO Elon Musk warned of difficulties in speeding up production.
US stocks have fallen in the past three weeks as investors pulled back from the tech surge, while JPMorgan and Bank of New York Mellon fell 3.1% and 4.0% respectively on Monday as well.
Concerns are also mounting about a delay in US stimulus measures, as Congress remains stalled for weeks on the size and shape of another coronavirus response bill, in addition to the roughly $ 3 trillion. that have already been enacted into law.
The weekend death of US Supreme Court Justice Ruth Bader Ginsburg appeared to make the approval of another package less likely ahead of the November 3 presidential election, prompting large falls in the sector. Of the health.
Back in Europe, Italy’s borrowing costs fell to multi-month lows on Tuesday due to a perceived reduction in political risk as right-wing opposition leader Matteo Salvini failed to make the gains he hoped for in regional elections. .
The results of the Sept. 20-21 vote, released Monday night, were a boost for the fragile coalition government that is battling the economic depression brought on by the coronavirus.
In commodities markets, gold fell against the firmer dollar to trade at $ 1,908.76 an ounce, while Brent oil gained 0.4% to $ 41.65 after losing $ 2 on Monday and the US crude rose 0.5% to $ 39.5 a barrel.
“Losing $ 2 a barrel yesterday is quite a steep drop, so the market is adjusting today,” said Bjornar Tonhaugen, director of oil markets at Rystad Energy.
(Reporting by Marc Jones; editing by John Stonestreet and Nick Macfie)
