Global shares slide as coronavirus cases continue to spike
LONDON (Reuters) – Global shares began the week with a cautious start on Monday. Asian and European markets fell after a spike in coronavirus cases across Asia over the weekend hurt investor sentiment, while oil hovered around two-anda-half-year highs.
MSCI’s All Country World Index, which tracks shares across 49 countries, was down 0.1% by midday trading in London. US stock futures traded positive, indicating gains at the open on Wall Street later in the day.
Stock markets across the world rebounded last week and were close to record highs as concern ebbed about future monetary tightening from the US Federal Reserve. On Monday, however, growing concern about the spread of the Delta variant of the COVID-19 virus took some shine off equities.
European stocks, as measured by the pan-European STOXX 600 index, were down 0.3% in late-morning trading, although they were not far off record highs. Germany’s DAX was down 0.1%, while France’s CAC 40 and Britain’s FTSE 100 index dipped 0.5%. Travel and leisure stocks took a particular hit, with the region’s sectoral index falling to a onemonth low.
“In Europe, the rapid spread of the highly contagious Delta variant is looming over the start of the tourist period,” OANDA market analyst Sophie Griffiths said, adding that European leaders have agreed to step up coordination of travel restrictions following a warning from German Chancellor Angela Merkel.
“While no changes in rules were agreed [upon], the statement could pave the way for more countries to follow Germany’s lead and prevent UK tourists from traveling to Europe this summer,” she said. “This would be a severe blow to airlines and travel and tourism stocks, which are trading sharply lower today.”
Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan was last a shade weaker at 702.57. Australian shares slipped 0.2%. Japan’s Nikkei and South Korea’s benchmark KOSPI were barely changed.
Investors were concerned about a spike in coronavirus infections in Asia. Sydney plunged into a lockdown after a cluster of cases involving the highly contagious Delta strain ballooned.
Indonesia is battling record-high cases, while a lockdown in Malaysia is set to be extended. Thailand announced new restrictions in Bangkok and other provinces.
Chinese shares were a touch higher, with the CSI300 index up 0.2%. Data over the weekend showed profit growth at China’s industrial firms slowed again in May as surging raw-material prices squeezed margins and weighed on factory activity.
Investors will keep a close eye on official factory activity from China, which is due Wednesday. The manufacturing reading is expected to slow to 50.7 from 51. The private-sector Caixin Manufacturing PMI will follow later in the week.
Weaker-than-expected US inflation and news of a bipartisan US infrastructure agreement boosted risk appetite last week.
“Investors are keenly watching the progress of US President [Joe] Biden’s bipartisan infrastructure deal through Congress,” ANZ analysts wrote in a note. “The package could boost demand significantly, driven by investment in renewables and electric vehicle (EV) infrastructure.”
Oil prices hit and then recoiled from highs last seen in October 2018 in early European trading on Monday as investors eyed the outcome of this week’s OPEC+ meeting. Brent futures fell 0.2% to $76.01 a barrel, while US crude fell 0.1% to $73.97.
The S&P 500 rose 2.7% last week, its strongest weekly gain since early February. Data showed a measure of underlying inflation for May rose less than expected, easing fears of a sudden tapering in stimulus by the Federal Reserve.
The Dow climbed 0.7%, while the tech-heavy Nasdaq slipped 0.06% after holding near the previous session’s record high.
The US dollar was slightly firmer at 91.808 against a basket of other currencies.
The Japanese yen weakened to 110.65 versus the greenback, and the euro eased to $1.1925.
An appreciating dollar took some luster off gold, with prices down 0.2% at $1,776.7 an ounce.