World stocks subdued as trade wars and Covid-19 rein in bulls
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London — World stocks’ return to record highs looked set to be delayed for another day on Thursday, as a stalemate in US stimulus talks, trade-war angst in both Europe and China, and the Covid-19 pandemic all reined the bulls back.
A leap from Japan’s Nikkei in Asia after Wall Street’s S&P 500 had finished just points off its record high had bolstered hopes of a breakthrough, but Europe had other ideas.
The Stoxx 600 was on course to snap a four-day winning streak after Washington said it would maintain 15% tariffs on planes and 25% tariffs on other European goods, while tourism giant TUI sank 4% as it reported an eye-watering €1.1bn loss.
“Though people think things are getting better, there is still so much uncertainty,” said Louise Dudley, a portfolio manager at Federated Hermes in London.
The global rally has seen MSCI’s world index rise 50% since its March lows to stand just 1.4% off its all-time high. Dudley said it still has room to run, especially with companies cutting costs and working-from-home arrangements helping high-flying tech and internet stocks.
In the currency and bond markets, normal service resumed as a decline in hopes for a compromise between Republicans and Democrats over additional stimulus for the US economy pushed the dollar down 0.3% against most of its peers.
A sell-off in benchmark US government bond markets also eased, as investors digested the biggest ever 10-year US debt sale and some surprisingly strong US inflation figures.
Benchmark German 10-year government yields were down 1.2 basis points at -0.45%. Consumer prices there, harmonised for comparability with other European countries, were confirmed down 0.5% in July from the previous month.
Traders will be watching for the US initial jobless claims later in the day, with economists polled by Reuters expecting a fall.
“The volatility of yields is just a reality that we have to deal with at the moment.” said Brian Jacobsen, at Wells Fargo Asset Management.
Central banks such as the US Federal Reserve are “not going to take the punch bowl away this time”, he said. “In fact, they are going to wait until the party is very much over until they take it away.”
Japan jump
In Asia, Japanese stocks were the main mover, soaring 1.8% to a six-month peak on gains from chip firms.
Markets are still eagerly awaiting a breakthrough in wrangling over the next US ...
A leap from Japan’s Nikkei in Asia after Wall Street’s S&P 500 had finished just points off its record high had bolstered hopes of a breakthrough, but Europe had other ideas.
The Stoxx 600 was on course to snap a four-day winning streak after Washington said it would maintain 15% tariffs on planes and 25% tariffs on other European goods, while tourism giant TUI sank 4% as it reported an eye-watering €1.1bn loss.
“Though people think things are getting better, there is still so much uncertainty,” said Louise Dudley, a portfolio manager at Federated Hermes in London.
The global rally has seen MSCI’s world index rise 50% since its March lows to stand just 1.4% off its all-time high. Dudley said it still has room to run, especially with companies cutting costs and working-from-home arrangements helping high-flying tech and internet stocks.
In the currency and bond markets, normal service resumed as a decline in hopes for a compromise between Republicans and Democrats over additional stimulus for the US economy pushed the dollar down 0.3% against most of its peers.
A sell-off in benchmark US government bond markets also eased, as investors digested the biggest ever 10-year US debt sale and some surprisingly strong US inflation figures.
Benchmark German 10-year government yields were down 1.2 basis points at -0.45%. Consumer prices there, harmonised for comparability with other European countries, were confirmed down 0.5% in July from the previous month.
Traders will be watching for the US initial jobless claims later in the day, with economists polled by Reuters expecting a fall.
“The volatility of yields is just a reality that we have to deal with at the moment.” said Brian Jacobsen, at Wells Fargo Asset Management.
Central banks such as the US Federal Reserve are “not going to take the punch bowl away this time”, he said. “In fact, they are going to wait until the party is very much over until they take it away.”
Japan jump
In Asia, Japanese stocks were the main mover, soaring 1.8% to a six-month peak on gains from chip firms.
Markets are still eagerly awaiting a breakthrough in wrangling over the next US ...
