Stocks slip on U.S.-China tensions; oil rises to 2-1/2-month high

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NEW YORK/LONDON (Reuters) – Global equities slid on Thursday on concerns about the long-term impact of the new coronavirus and renewed U.S.-China tensions, though oil markets ignored those worries and marched to a 2-1/2 month highs.

FILE PHOTO: A man crosses a nearly deserted Nassau Street in front of the New York Stock Exchange (NYSE) in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar

Bourses in London .FTSE, Paris .FCHI and Frankfurt .GDAX fell around 1%, but Wall Street declined less than half that.

The dollar traded in a narrow range as investors weighed the impact of global business lockdowns and the euro’s four-day rally against the U.S. currency ran out of steam.

Gold fell more than 1% as a strong dollar pushed it off this week’s 7-1/2 year peak.

Rising tensions between Washington and Beijing gave investors pause.

President Donald Trump warned the United States would react “very strongly” against China trying to gain more control over Hong Kong through new national security legislation. U.S. Secretary of State Mike Pompeo on Wednesday called China’s $2 billion pledge to fight the pandemic “paltry.”

“The biggest threat to the U.S. market this year is actually the potential for ignition of the tariff war, between the U.S. and China,” said Kristina Hooper, chief global market strategist at Invesco in New York.

Stocks in the short run are driven by news flow, though bias is to the upside because of easy monetary policy from the Federal Reserve, Hooper said.

MSCI’s gauge of stocks across the globe .MIWD00000PUS shed 0.69%, while the pan-European STOXX 600 index lost 0.75%.

On Wall Street, the Dow Jones Industrial Average .DJI fell 95.48 points, or 0.39%, to 24,480.42. The S&P 500 .SPX lost 19.84 points, or 0.67%, to 2,951.77 and the Nasdaq Composite .IXIC dropped 72.40 points, or 0.77%, to 9,303.38.

Purchasing manager index surveys (PMIs) in Europe confirmed economic activity has begun to return, though they were far from stellar.

Euro zone-wide figures came in better than expected overall but Germany’s improvement undershot forecasts. It was the third month in a row that the surveys were plonked firmly in economic contraction territory.

Oil rose on the view that slumping fuel demand should rebound. Brent, the international benchmark, has bounced up $20 a barrel over the past month.

U.S. crude futures CLc1 rose 43 cents to settle at $33.92 a barrel, while Brent LCOc1 settled up 31 cents at $36.06 a barrel.

The market absorbed the latest glut of government debt to pay for coronavirus support programs fairly smoothly. The United States on Wednesday auctioned $20 billion of 20-year debt, the first such sale since 1986.

Italy sold roughly the same on Thursday and Spain said it will need to raise almost 100 billion euros more than planned.

The benchmark U.S. 10-year notes US10YT=RR fell 0.4 basis points to yield 0.6736%.

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U.S. weekly jobless claims came in at a seasonally adjusted 2.4 million, in line with a Reuters survey of economists ahead of the data and well off the record 6.867 million at the end of March.

The dollar index =USD rose 0.22%, with the euro EUR= down 0.23% to $1.0952. The Japanese yen weakened 0.13% versus the greenback at 107.68 per dollar.

U.S. gold futures GCv1 settled 1.7% lower at $1,721.90 an ounce.

Reporting by Herbert Lash; Editing by David Gregorio and Andrea Ricci



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