Daily Outlook

Stocks wobble as investors assess risks of second wave

Asian shares and U.S. stock futures teetered in choppy trade on Friday as lingering concerns about an fresh spike in coronavirus cases offset growing hopes for a quick economic recovery. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1%. U.S. S&P 500 e-minis moved in and out of the red, and were last up 0.21%. Shares in China rose 1.15%, led by gains in financials and the health care sector, but South Korean stocks fell 0.25% due to concern about diplomatic tension with North Korea. Australia’s S&P/ASX 200 erased gains to trade 0.08% lower, unsettled by a major cyberattack on all levels of Australian’s government.

Oil futures rose in Asia on hopes that output cuts will put a floor under prices. Euro Stoxx 50 futures were up 0.03%, German DAX futures edged up 0.04%, while FTSE futures gained 0.19% in cautious trade. On the whole, markets have been sideswiped this week on fresh contagion concerns, prompting some investors to temper their optimism about how quickly the global economy can recover for the pandemic.

On Thursday around 400 workers at a slaughterhouse in northern Germany tested positive for the virus. At the same time, investors are nervously following a cluster of cases in Beijing and rising cases in several U.S. states. All three major U.S. stock indexes were range-bound and oscillated through much of the day as investors struggled to interpret the impact of U.S. employment data without any guidance from corporations on their earnings. Data on Thursday showed the number of U.S. unemployed remains stubbornly high amid signs of a second wave of corporate layoffs as companies grappled with large declines in revenue because of the coronavirus outbreak.

U.S. crude ticked up 0.9% to $39.19 a barrel, while Brent crude rose 0.87% to $41.87 per barrel. In foreign exchange markets, the dollar headed for its best week in a month against a basket of major currencies as a resurgence in coronavirus cases knocked confidence in a rapid economic recovery and drove investors to the safety of the world’s reserve currency. The British pound was mired near a two-week low at $1.2403 due to concerns that the Bank of England’s bond purchases may not be enough to support an economic revival.

Sterling could stage a mild recovery if retail sales data due later on Friday point to a rebound in consumer spending. Benchmark 10-year U.S. Treasury notes edged up to 0.7019%, but further gains could be capped due to worries about the U.S. labour market.

Stocks wobble as investors assess risks of second wave, Reuters, Jun 19

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