World stocks falter as COVID-19 fears fears of recovery expectations

LONDON (Reuters) – Global stock markets faltered on Monday, as the COVID-19 cases that erupted offset investors’ hopes of a quick economic recovery, even after data showed that l China’s economy rebounded faster than expected in the fourth quarter of 2020.

European shares measured by the STOXX 600 index fought for its direction, trading for the last time 0.1% from 1446 GMT, after failed merger negotiations between French retailer Carrefour and Alimentation Couche- Later they lowered the indicator downwards. The continent’s 50 largest stocks fell 0.2% [.EU]

In Asia, Chinese blue chips rose 1.1% after the economy was reported to grow 6.5% in the fourth quarter, a year earlier, beating forecasts by 6.1%.

December industrial production also exceeded estimates, although retail sales lost expectations.

“The recovery in domestic demand still does not have solid support,” said Lauri Halikka, SEB’s fixed-income and cash strategist. “Sporadic virus outbreaks have intensified downside risks in the short term.”

China reported more than 100 new cases of COVID-19 for the sixth day in a row, with rising infections in the Northeast fueling concern about another wave as hundreds of millions of people travel on holiday. lunar new year.

New difficult controls in Gongzhuling City, Jilin Province, which has a population of about one million people, brings the total number of people closed to more than 29 million.

Hallika said the impact of recent regional closures and massive tests is likely to be limited and short-lived.

The economic recovery in China was in stark contrast to the United States and Europe, where the spread of the coronavirus has affected consumer spending, underscored by sad U.S. retail sales reported Friday.

Poor information on U.S. consumer spending last week helped the Treasury reduce some of the recent strong losses and 10-year yields traded at 1.097%, below last week’s high (1.187% ).

At the same time, the more sober mood boosted the US dollar of safe haven, achieving a deeply short bear market. Speculators raised their short net position in dollars to the largest since May 2011, the week ended January 12th.

Doubts are also evident about how much of the stimulus package of U.S. President-elect Joe Biden will come through Congress in the face of Republican opposition, and the risk of further violence in his inauguration on Wednesday.

BUBBLE?

Elsewhere, in Asian markets, the Japanese Nikkei fell 1% and exceeded the 30-year high.

The MSCI ‘All Country World Index, which tracks the actions of 49 countries, traded 0.05% lower for a second session, after hitting record highs just last week.

The future E-Mini of the S&P 500 will be traded, although Wall Street will remain closed on Monday for holidays.

Recent price actions in the markets have motivated investors to debate the possibility of overvaluing asset markets.

In a monthly letter to clients last week, Mark Haefele, investment director at UBS Global Wealth Management, said there were all the prerequisites for a bubble.

“Financing costs are at record lows, new entrants are being attracted to markets and the combination of high cumulative savings and low prospective returns on traditional assets creates the means and desire to engage in speculative activities,” he said. .

He warned that in the coming months investors should pay special attention to the “risks of a monetary policy investment, rising equity valuations and the post-pandemic recovery rate.”

Haefele, however, said that while he saw bags of speculation, the broader equity market was not in a bubble.

Cryptocurrency bitcoin traded up 1.6% and grossed $ 36,393.

The dollar index fell 0.06% to 90,818, the strongest since Dec. 21 and far from the recent 2-1 / 2-year low, at 89,206.

The euro traded at $ 1.2072, the lowest since December 2, while the dollar gained 0.15% against the yen at 103.73 and well above the recent low of 102. 57.

The European Central Bank will face further questions this week about an increasingly difficult outlook just a month after it unleashed a new stimulus to boost the eurozone economy.

The Canadian dollar fell to $ 1.2792 per dollar after Reuters reported that Biden planned to revoke the permit for the Keystone XL pipeline.

Biden’s election for Treasury Secretary Janet Yellen is expected to rule out the search for a weaker dollar when he declares on Tuesday, the Wall Street Journal reported.

Gold prices gained 0.3% to $ 1,833 an ounce from its January high of $ 1,959.

Crude oil prices fell in profit, as the spread of ever-narrower closures globally would affect demand, a drop that also dragged the Russian ruble to 1.1%.

Brent crude futures fell 0.1% to $ 55.03 a barrel, while US crude traded at $ 52.34.