AFP – Stock markets were mixed yesterday as a two-day rally ran out of steam on profit-taking, with investor confidence also tempered by worries about the long-term damage Coronavirus lockdowns are having on the global economy.
Equities have enjoyed a broad advance for several weeks as virus infection and death rates slow in badly hit countries, allowing governments to lift strict stay-at-home measures that have hammered businesses.
But, while there is a general feeling the worst is past, simmering China-US tensions and a slew of data highlighting the deep wounds being inflicted on economies continues to trouble trading floors.
The World Bank warned the crisis could leave about 60 million in extreme poverty, adding that it saw the global economy contracting 5 percent this year.
Treasury Secretary Steven Mnuchin, meanwhile, said the US economy could endure “permanent damage” if lockdowns to keep COVID-19 from spreading drag on.
Monday’s news of promising results from early trials of a possible vaccine fired a surge across markets.
But that has been tempered by a report in Stat News – which focuses on health and medicine – that was sceptical of the announcement, saying it “revealed very little information” and no data about the treatment.
“We are being fairly cautious,” Shawn Matthews of Hondius Capital Management told Bloomberg TV. “If you look at the economy, it feels like it’s the summer of hope right now, where everyone is hoping it’s going to turn around.”
Tokyo ended 0.8 percent up, Hong Kong edged 0.1 percent higher, Sydney rose 0.2 percent and Mumbai added 0.9 percent, while there were also advances in Seoul, Taipei, Manila and Bangkok.
But Shanghai dipped 0.5 percent, Singapore shed 0.9 percent and Jakarta dropped 0.3 percent. London, Paris and Frankfurt were all in the red in morning trading.
Investors were keeping tabs on Washington, where House Democrats have passed a $3 trillion aid bill, to add to a similar stimulus already agreed.
But Republican senators are unlikely to push it through, saying existing measures should first flow through the economy.
Analysts have warned that the deep divisions on Capitol Hill, particularly with elections in November, will likely mean any new deal cannot be expected any time soon. Oil markets were flat after snapping a four-day rally on Tuesday on profit-taking, with uncertainty about the economic outlook offsetting optimism over the lifting of lockdowns and huge output cuts by the world’s biggest producers.
Still, prices were supported by news that US stockpiles had fallen last week by five million barrels.