Lockdown in global tech hub hits stocks
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[July 14, 2020] By
Tom Arnold and Tom Westbrook
LONDON/SINGAPORE (Reuters) - Global stocks
slipped on Tuesday, oil fell and a safety bid supported the dollar as
simmering Sino-U.S. tensions and new coronavirus restrictions in
California kept a lid on optimism as earnings season got underway.
MSCI's All-Country World Index edged down 0.4% after touching a 20-week
high on Monday. The pan-European STOXX 600 was 1.3% lower and was
heading for its worst day in 14 sessions after technology stocks dropped
3.4%. This followed a slump on Monday in the tech-heavy Nasdaq.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1%.
Chinese stocks were down despite better-than-expected trade numbers. The
U.S. dollar gained.
The moves followed a selloff on Wall Street after California Governor
Gavin Newsom ordered bars closed and restaurants and movie theatres to
cease indoor operations.
S&P 500 futures were 0.3% stronger after the index lost 0.9% on Monday.
Tension grew between Washington and Beijing after the United States
rejected China's claims to offshore resources in most of the South China
Sea.
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The Trump Administration also plans to scrap a 2013 auditing agreement
that could foreshadow a broader crackdown on U.S.-listed Chinese firms.
"It's not just the tempo which is picking up, but the aspect of so many
areas being pulled into the dispute," said Vishnu Varathan, head of
economics at Mizuho Bank in Singapore.
"Last time, it was really about the bottom line," Varathan said, but
what had primarily been a trade dispute is now much broader, making a
resolution less likely and the next moves less predictable.
The Shanghai index fell 0.7% despite official figures showing Chinese
exports and imports topped forecasts in June, while China continued to
buy significant amounts of commodities, including iron ore.
The return of restrictions in California also has markets on edge about
whether the coronavirus can wreak more economic harm. Global infections
have surged by a million in five days, and top 13 million.
ALL ABOUT 2021
Oil prices, a proxy for global energy consumption and growth
expectations, reflected the concerns. U.S crude futures fell 1% to
$39.70 per barrel and Brent futures fell 0.8% to $42.40 per barrel.
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![](../images/071420PICS/busine39.jpg)
A street cleaning operative walks past the London Stock Exchange
Group building in the City of London financial district, whilst
British stocks tumble as investors fear that the coronavirus
outbreak could stall the global economy, in London, Britain, March
9, 2020. REUTERS/Toby Melville
![](http://archives.lincolndailynews.com/2020/Jul/14/images/ads/current/peasley%20lda%20080907.png)
Investors sought out the safety of euro zone government bonds. Most yields were
two to three basis points lower, with Germany's 10-year Bund yield, the region's
benchmark, dropping to -0.42%.
There are also signs of an interruption to the steady flow of
better-than-expected economic data. On Tuesday, data showed Singapore entered
recession last month, with the economy contracting 41.2% for the quarter, worse
than the 37.4% analysts had forecast.
Britain's gross domestic product rose by 1.8% in May after falling by a record
20.8% in April, the Office for National Statistics said, well below forecasts in
a Reuters poll.
Currency markets kept the dollar in a tight range. Against a basket of
currencies, the dollar index was down 0.1% at 96.453. The euro was 0.2% stronger
against the dollar at $1.1369.
The focus will shift later to U.S. earnings, with JP Morgan, Citigroup, Wells
Fargo and Delta Air Lines due to report on Tuesday to a market already looking
to 2021 and beyond.
(Graphic: Global earnings 2020 forecast,
https://fingfx.thomsonreuters.com/
gfx/buzz/bdwvkamxdvm/Pasted%20image%201594627756300.png)
"It's really about 2021 -- 2020 is over," said fund manager Hugh Dive, chief
investment officer at Atlas Funds Management in Sydney, where earnings season
begins next month.
"The outlook statements are what the market will look at," he said. "If a
company surprises on the upside with their 2020 earnings, but has shaky
commentary for 2021 ... they're not going to be rewarded for that."
![](http://archives.lincolndailynews.com/2020/Jul/14/images/ads/current/charrons_bch041713.png)
Spot gold slipped 0.5% at $1,793.14 per ounce.
(Additional reporting by Pete Schroeder in Washington and Paulina Duran in
Syndey; editing by Larry King)
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