Global stocks retreat as virus uncertainty tempers lockdown easing

LONDON (AFP) - Stock markets mostly fell yesterday after rallying for much of the week, with any gains dragged by profit-taking amid concerns over the long-term impact of the virus and worsening China-US relations.

Tokyo’s stock market ended 0.2-percent lower, Shanghai shed 0.6 percent and Hong Kong fell 0.5 percent.
However, Mumbai, Seoul, Taipei, Kuala Lumpur and Manila were all in positive territory.

In Europe approaching the half-way stage, London was down 0.7 percent, Frankfurt lost 1.4 percent and Paris dropped 1.0 percent.

The eurozone’s economic slump has “likely bottomed out” after the bloc suffered a disastrous collapse under lockdowns to contain coronavirus, a closely watched survey by IHS Markit said Thursday.

The dollar traded mixed and oil prices climbed.

Equities have enjoyed weeks of advances thanks to signs the pandemic is easing in major economies and the gradual lifting of lockdown measures that are expected to have sent the world into a deep recession.

But that optimism has been tempered by uncertainty about the future, while US President Donald Trump has continued to target China over the outbreak and threatened fresh tariffs on the country, fuelling worries of another trade war between the superpowers.

“The prospect of economies reopening and returning to something that resembles normal has, at times, been very positive for markets, as have positive vaccine and treatment trials, but it hasn’t all been good news,” said Craig Erlam, senior market analyst at Oanda Europe.

“There’s been some setbacks in countries previously lauded for their handling of the spread..., putting more emphasis on the dreaded second wave if the exit strategy isn’t handled properly.

“On top of that, tensions between the US and China have increased dramatically which is making investors nervous,” Erlam added.

Trump on Wednesday tweeted that “it was the ‘incompetence of China’, and nothing else, that did this mass worldwide killing”.

He later accused counterpart Xi Jinping of being behind a “disinformation and propaganda attack on the United States and Europe”.

“It all comes from the top”, he said, adding that China was “desperate” to have former vice president Joe Biden win November’s presidential election.

Stephen Innes, of AxiCorp, warned that investors might not be taking the simmering tensions seriously enough.