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Equities mostly down as uncertainty tempers reopenings

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The US Federal Reserve highlights its concerns about the impact of the outbreak. AFP

AFP – Stock markets mostly fell yesterday after rallying for much of the week, with any gains dragged by profit-taking while concerns over the long-term impact of the virus and worsening China-US relations added to the selling pressure.

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 Donald Trump has continued to target China over the outbreak and threatened fresh tariffs on the country, fuelling worries of another painful trade war between the superpowers.

In his latest volley, on Wednesday night, he 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.

“Markets may be pricing in far too much complacency as the US-China “phase one” trade deal could be at risk, as the pandemic and resulting acute economic downturn have made China’s trade commitment to the US much more challenging to fulfil,” he said in a note to investors.

Minutes later the Federal Reserve highlighted its concerns about the impact of the outbreak.

Policymakers were worried that “even after social-distancing requirements were eased, some business models may no longer be economically viable”.

This would be the case especially if consumers decide to “avoid participating in particular forms of economic activity”, the minutes said.

The World Health Organization said 106,662 virus cases were reported on Tuesday, the biggest daily jump since the disease broke out in December, with Latin America now of particular concern.

Tokyo ended down 0.2 percent, Shanghai shed 0.6 percent and Hong Kong fell 0.5 percent with Sydney 0.4 percent off.

Singapore dropped 0.1 percent and Wellington also gave up 0.5 percent.

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