Stocks struggled for direction on Monday morning, amid mixed signals about the COVID-19 pandemic.
The FTSE 100 (^FTSE), DAX (^GDAXI), and CAC 40 (^FCHI) all dropped over 1% at the open. The worst hit was the CAC 40 in Paris, which was off around 1.5%.
However, by mid-morning, all three had recovered to trade in the green. The DAX and CAC 40 were both up 0.4% around 10.45am UK time.
“Investors continue to be pulled from different directions by various headwinds and tailwinds,” said Russ Mould, investment director at stockbroker AJ Bell.
“On one hand there is positive news such as Spain accepting UK tourists without the need for quarantine, adding to the list of restrictions being lifted across Europe.
“On the other hand, the US still seems to be struggling to contain the coronavirus and the risk of a second wave is still front of mind for many people.”
The US recorded 24,800 new COVID-19 cases on Sunday. Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the US is “on course for five million [COVID-19 cases] by the third week of August, and 10 million by mid-October, in the absence of drastic changes in either public policy and/or people's behaviour in the states where cases are rising.”
Meanwhile, Germany is dealing with a fresh spike in new cases, linked to an outbreak in a major meat processing factory. China also continues to tackle an outbreak in Beijing. Schools have been closed in the Chinese capital and people have been asked to work from home.
Global confirmed cases look set to soon pass nine million, while deaths stand at 468,331 according to John Hopkins University.
“The virus spread continues to create a lot of uncertainty in markets,” Jim Reid, a strategist at Deutsche Bank, said. “For example, does it matter that the troublesome US states are continuing to see case numbers increase or does it provide some good news that economies can stay open as cases rumble on?”
US futures were pointing to a strong open later today in New York. S&P 500 futures (ES=F), Dow Jones futures (YM=F), and Nasdaq futures were up 1%.
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“Traders continue to show fewer concerns about a new spike in coronavirus cases,” Naeem Aslam, chief market analyst at Avatrade, said in relation to US futures.
“One factor that calls for traders’ attention is that that volume isn’t great and this usually means that the momentum may not last for that long.”
Asian markets were weak overnight. Japan’s Nikkei (^N225) slipped 0.1%, the Hong Kong Hang Seng (^HSI) slipped 0.7%, the Shanghai Composite (000001.SS) closed flat, and the Shenzhen Component (399001.SZ) rose 0.2%.
In London, travel stocks came under pressure. Continued outbreaks of COVID-19 make the prospects of a revival for the battered holiday sector even slimmer.
British Airways-owner IAG (IAG.L) slipped 3.9%, cruise operator Carnival (CCL.L) dropped 2%, InterContinental Hotel Group (IHG.L) dropped 1.3%, and easyJet (EZJ.L) fell 1.5%.
Glencore (GLEN.L) dropped sharply at the open. The commodities trader fell as much as 3.7% as investors reacted to news of a Swiss criminal probe into an alleged failure to prevent corruption in the Democratic Republic of Congo where it has business dealings. The investigation was disclosed after markets closed on Friday.
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June 22, 2020 at 02:43PM
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Mixed signals leave stock markets struggling for direction - Yahoo Finance
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