By Elaine Kurtenbach
BANGKOK (AP) — Global stock markets were subdued on Wednesday as investors worried about the risks of reopening economies from coronavirus shutdowns too soon.
Stocks retreated in London, Tokyo and Paris, but reversed early losses in Shanghai. Wall Street futures pointed to small gains on the open in the United States.
India’s Sensex jumped more than 2% after the government announced it would spend more than $260 billion more to help the economy weather the pandemic.
Underscoring concerns about the risks of ending shutdowns before the coronavirus pandemic is brought under control, the top U.S. infectious diseases expert, Dr. Anthony Fauci, told Congress on Tuesday that if the country reopens too soon, it could not only cause “some suffering and death that could be avoided, but could even set you back on the road to try to get economic recovery.”
Those comments reverberated in global markets.
“Over and above the recent resurfacing of cases in countries such as China and Germany, Dr. Fauci’s comments pack in more arguments against a rapid reopening of U.S. states which had been supported by President Donald Trump and fueled the gains seen for U.S. markets of late,” Jingyi Pan of IG said in a report.
Governments have been loosening restrictions as they try to staunch the economic carnage from pandemic shutdowns, despite signs of fresh outbreaks in some countries, such as China and South Korea.
In China, where the virus first surfaced, authorities announced seven new cases on Wednesday. Six were in Jilin province, in the northeast, where alert levels were raised and rail connections suspended.
South Korea reported 26 additional cases of the coronavirus over the past 24 hours amid a new spike in infections linked to nightclubs in Seoul.
Pakistan, meanwhile, confirmed 2,000 new positive coronavirus cases in a single day, just days after its prime minister, Imran Khan, eased lockdown restrictions and stepped up the return of Pakistanis stranded overseas despite pleas for stricter controls by Pakistan’s medical professionals.
Britain’s FTSE 100 slipped 0.9% to 5,941 after official figures showed the British economy shrank by 2% in the first quarter of the year from the previous three-month period as restrictions on economic activity were ramped up ahead of a coronavirus lockdown that began in late March.
The CAC 40 in Paris sank 1.7% to 4,398. Germany’s DAX lost 1.4% to 10,665.
Wall Street looked set for a recovery, however, with the future for the S&P 500 up 0.6% while the future for the Dow industrials gained 0.7%.
Markets will essentially be in wait-and-see mode for the next two to four weeks as investors gauge how reopenings are going, analysts said.
“No one, and I mean no one, including corporations, wants to wear the scarlet letter for being responsible for the secondary outbreak,” Stephen Innes of AxiCorp said in a commentary. “So while re-openings may occur, they will only happen in a gradual context where social distancing rules permit or workplace safety can be exercised.”
Tokyo’s Nikkei 225 index lost 0.5% to 20,267.05 and the Hang Seng in Hong Kong ended lower, down 0.3% at 24,180.30.
The Shanghai Composite index gained 0.2% to 2,898.05 and South Korea’s Kospi jumped 1% to 1,940.42 after the government said it needed more time to assess recent outbreaks and would not immediately re-impose new restrictions to fight the virus.
Australia’s S&P ASX 200 gained 0.4% to 5,421.90, while shares in Taiwan surged 0.5%.
After dropping by roughly a third from February into late March on worries about the coming recession, share prices began recovering after central banks and governments unleashed trillions of dollars of help for swooning economies. The latest implementation of that came Tuesday, when the New York Fed began buying funds to support the corporate bond market.
Treasurys were some of the first investments to signal the economic devastation coming from the pandemic. The yield on the 10-year Treasury was steady at 0.66% on Wednesday, down from 0.72% late Monday. It tends to fall when investors are downgrading their expectations for the economy and inflation.
A barrel of U.S. oil to be delivered in June rose 11 cents to $25.89 per barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it gained $1.25 to $26.33. Brent crude, the international standard, gained 30 cents to $30.28 per barrel.
The dollar was trading at 106.94 Japanese yen, down from 107.13 late Tuesday. The euro weakened to $1.0875 from $1.0848.
Source: AP News