By Pan Pylas
LONDON (AP) — Stronger than anticipated Chinese economic data briefly shored up stocks on Tuesday, but a worrying increase in the number of Spanish deaths linked to the COVID-19 disease saw market sentiment sink back again.
The mood in markets seems tightly linked to evidence about the spread of the new coronavirus pandemic. That was evident with the news Tuesday that Spain saw a record 849 daily deaths of people who had contracted the COVID-19 disease.
Stock markets in Europe quickly shed a chunk of their gains. Germany’s DAX index was up only 0.6 at 9,874 having earlier traded nearly 3% higher. Britain’s FTSE 100 was up 0.8% at 5,610 while the CAC-40 in France fell 0.1% at 4,375. Wall Street was poised for modest declines at the bell with Dow futures and the broader S&P 500 futures down 0.2%. On Monday, both U.S. indexes closed up by more than 3%.
Before the Spanish death toll numbers, sentiment had been boosted by the strong Chinese data showing that the world’s second-largest economy was recovering after authorities relaxed anti-disease controls and allowed factories to reopen as the number of infections have fallen sharply.
The monthly official manufacturing purchasing managers’ index — a broad gauge of economic activity — rose to 52.0 points in March from 35.7 in February, while the equivalent index for the non-manufacturing sector spiked to 52.3 from 29.6. Anything above 50 indicates an expansion in activity, so the sharp rebound is welcome news in the markets even though it points to fairly tepid growth.
“Investors should be careful about drawing too many inferences from one figure, since one swallow does not a summer make,” said Chris Beauchamp, chief market analyst at IG in London.
Since the height of the selling in markets a couple of weeks back, the mood has appeared to improve as governments and central banks use everything they can to contain the economic damage of the pandemic. The S&P 500, for example, is coming off its best week in 11 years, though it remains 22.4% below its record set last month, and oil tumbled to an 18-year low.
The number of known infections around the world has topped 780,000, according to Johns Hopkins University. The United States has the highest number in the world, more than 160,000.
Most people who contract COVID-19 have mild or moderate symptoms, which can include fever and cough. But for others, especially older adults and people with existing health problems, the virus can cause pneumonia and require hospitalization. More than 37,000 have died worldwide due to COVID-19, while more than 160,000 have recovered.
“We’re also still not even close to peak coronavirus in the U.S. which has already reported more cases than any other country and will sadly likely see a huge spike in the number of deaths, meaning further lockdown measures will likely follow,” said Craig Erlam, senior market analyst at OANDA Europe. “Huge challenges still lie ahead.”
Tuesday’s trading in Asia showed how fragile the mood can be. Japan’s benchmark Nikkei 225 rose in morning trading but reversed course to dip nearly 0.9%, finishing at 18,917.01. Australia’s S&P/ASX 200 also fell back, losing 2.0% to 5,076.80, while South Korea’s Kospi picked up 2.2% to 1,754.64. Hong Kong’s Hang Seng stood at 23,603.48, up 1.9% and the Shanghai Composite inched up 0.1% to 2,750.30.
Benchmark U.S. crude added $1.40 to $21.49 a barrel after touching its lowest price since 2002. Oil started the year above $60 and has plunged on expectations that a weakened economy will burn less fuel. The world is awash in oil, meanwhile, as producers continue to pull more of it out of the ground. Brent crude, the international standard, picked up 73 cents to $23.49 per barrel.
In currency markets, the euro slid 1% to $1.0939 while the dollar rose 0.8% to 108.62 yen.
_____
Source: AP News
