World shares sink after China data misses forecasts
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[August 14, 2020]
By Tom Arnold and Stanley White
LONDON/TOKYO (Reuters) - Global shares
dipped on Friday after lacklustre Chinese economic data and worries
about a delay in U.S. fiscal stimulus discouraged some investors from
taking on risk.
European shares were also dragged lower by a hit to travel stocks after
Britain added more European countries to its quarantine list.
The pan-European STOXX 600 was down 0.7%, although on track to gain for
a second straight week.
MSCI's world index was 0.2% lower, drifting further from all-time highs
touched in February. The index has still rallied close to 50% from
March's trough in the wake of the COVID-19 pandemic.
"The rally was over-extended and most of the good news is already priced
in," said Francois Savary, chief investment officer at Swiss wealth
manager Prime Partners.
"There are no more positive than expected earnings and we're back to the
macro background and the checking of the data regularly to see if the
recovery is sustainable. Markets are pricing a lot of good news and we
will be entering a period of volatility with the U.S. elections coming
up."
Preliminary European employment and GDP numbers due at 0900 GMT and U.S.
retail sales figures at 1230 GMT will be watched for signs of divergence
between the U.S. and European recoveries.
Data showing a slower-than-expected rise in Chinese industrial
production and a surprise fall in retail sales put Asian shares on the
backfoot.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1%,
although shares in Japan rose 0.2%.
Chinese shares rose 1.5% in choppy trade, with the data suggesting
domestic demand is still struggling after the coronavirus outbreak.
E-mini futures for the S&P 500 were flat.
The benchmark German 10-year Bund yield fell to -0.42% after rising for
three sessions and having touched a six-week peak in early trade.
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A visitor wearing protective face mask, following an outbreak of the
coronavirus, walks past in front of a stock quotation board outside
a brokerage in Tokyo, Japan March 2, 2020. REUTERS/Issei Kato
Yields on U.S. Treasuries remained elevated after an auction of
30-year bonds on Thursday met weak demand.
Further equity gains are likely to be limited as investors await
progress in negotiations over U.S. economic stimulus, which is
necessary to prevent a nascent recovery in the world's largest
economy from sliding into reverse.
Some traders stuck to the sidelines before a meeting between U.S.
and Chinese officials about their Phase 1 trade deal on Saturday.
Spot gold fell 0.35 to $1,947.43 as high U.S. Treasury yields
prompted investors to reassess their positions. Bullion has declined
more than 4% so far this week, its biggest weekly percentage fall
since early March.
Data on Thursday showed the number of Americans seeking unemployment
benefits dropped below one million for the first time since the
start of the pandemic, but was not enough to change economists'
views that the jobs market is faltering.
U.S. Treasury yields also supported the U.S. dollar, which held
steady at 106.90 yen and $1.1812 against the euro.
The dollar index was headed for an eighth consecutive week of
losses, its longest weekly losing streak since June 2010.
Oil edged further below $45 a barrel amid worries about supply
recovery and rising supply. Brent crude fell or 0.7% to $44.67,
reversing this week's gains. U.S. West Texas Intermediate slipped
0.6% to $41.99. [O/R]
(Additional reporting by Lawrence Delevingne in Boston; Editing by
Kirsten Donovan)
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