World markets retreat on renewed pandemic fears
NEW YORK: Demand for safe havens rose and global equity markets turned south on Friday after Apple Inc said it would temporarily shut 11 US stores as coronavirus cases continue to rise, rekindling fears of a deadly second wave of the pandemic. News of Apple’s move involving stores in Florida, Arizona, South Carolina and North Carolina doused hopes for a quick economic recovery that had spurred risk appetite earlier in the day, driving up European and US stocks about 1 percent.
The dollar rebounded from earlier losses and was on track for its best weekly gain in a month, while gold rose more than 1 percent, with futures settling above the technical barrier of $1,750 an ounce. Treasury yields also fell on safe-haven demand. Apple’s decision portends more restrictions coming back as coronavirus cases increase and the reopening process stalls, said Edward Moya, senior market analyst at currency brokerage OANDA.
The $1,750 mark “has been a big barrier for gold and speaks strongly that the safehaven trade is not going away anytime soon,” Moya said. Stocks in Europe pared some gains but closed higher before the Apple news broke. Investors remained hopeful that a massive 750 billion euro stimulus package will soon be passed, though European Union leaders made little progress in negotiations. The Nasdaq’s surge above the 10,000 mark, putting it on track to set a record closing high, was foiled by Apple. MSCI’s gauge of stocks across the globe shed 0.05 percent while the pan-European STOXX 600 index rose 0.56 percent. Emerging market stocks rose 0.65 percent.
On Wall Street, the Dow Jones Industrial Average fell 108.29 points, or 0.42 percent, to 25,971.81. The S&P 500 lost 8.7 points, or 0.28 percent, to 3,106.64 and the Nasdaq Composite dropped 3.15 points, or 0.03 percent, to 9,939.91. Investors have been tugged in opposite directions by improving economic data and new breakouts of COVID-19 infections. California, North Carolina and a string of US cities have mandated or urged mandatory mask use to contain spiraling coronavirus cases.
Mainland China reported 32 new coronavirus cases as of the end of June 18, 25 of which were reported in Beijing, China’s National Health Commission said. Oil prices pulled back sharply from early highs on concerns the pandemic’s continued spread could stall the recovery.
Boston Federal Reserve President Eric Rosengren said more fiscal and monetary support for the US economy will likely be needed, echoing comments by the European Central Bank chief, who said the EU’s economy was in a “dramatic fall.” Brent futures rose 68 cents to settle at $42.19 a barrel while US crude settled up 91 cents at $39.75.—Reuters