European markets breathe easier after the disappearance of the second wave

LONDON: European stock markets regained some ground on Tuesday, a day after rising second waves of the coronavirus epidemic caused the region’s worst destruction since June and led investors to turn to government bonds.

Conditions were still hectic. South Korean and Chinese stocks had knocked Asia down for a second day after the high-tech Nasdaq fell outside of its recent stellar range, so it was a relief for traders to see Europe stabilize.

The pan-European STOXX 600 Index recovered 0.5 percent from the 3.2 percent it lost on Monday, helped by respective gains of 1.5 percent and 0.6 percent for the technology and healthcare sectors.

However, travel and leisure stocks were down 0.3% to add to Monday’s 5.2% drop, and as investors stayed close to safety, Germany’s government bond yields held steady. 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. removed 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 arose in the currency market, with the euro and the British pound falling around 0.3% against the dollar.

UK Prime Minister Boris Johnson will encourage Britons to return to work from home on Tuesday, along with new restrictions on pubs, bars and restaurants.

This came as France saw its seven-day daily mobile case count rise above 10,000 for the first time over the weekend, 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 weakened a further 2%, after leaked reports showed they were among the global lenders who have transferred more than $ 2 trillion in shady funds during almost two decades.

“Markets globally have raced under the weight of enormous liquidity, so it is not surprising to see a pullback in some valuations,” said James Rosenberg, advisor to EL&C Baillieu in Sydney.

“Add uncertainty with the US elections and another wave of COVID in Europe … that makes investors uneasy.”

RETURN TO THE FUTURE

Australia’s S & P / ASX 200 had fallen 0.7 percent, pressured by mining companies and energy stocks and the Australian dollar fell to a one-month low, while Hong Kong’s Hang Seng Index closed with a drop of almost 1 percent.

Japanese markets were closed for a holiday, but early trading indicated a subdued day for Wall Street, with S&P 500 futures down 0.18 percent and Nasdaq 100 futures down a flat penny.

US stocks have tumbled for the past three weeks as investors shed tech-related heavyweight stocks after an impressive rally that took the S&P 500 and Nasdaq to new highs.

JPMorgan and Bank of New York Mellon were down 3.1% and 4.0% respectively on Monday as well.

Concerns are also mounting about a delay in U.S. stimulus measures after Congress has been stalled for weeks on the size and shape of another coronavirus response bill, in addition to the roughly 3 trillion dollars that have already been enacted into law.

The 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 declines in the healthcare sector.

Gold fell against the higher dollar to trade at $ 1,908.76 an ounce, while in oil markets, Brent gained 0.4% to $ 41.65 and US crude rose 0.5% to $ 39.5 a barrel.

(Reporting by Marc Jones; editing by John Stonestreet)