LONDON (Reuters) – A recovery in global stocks stalled on Monday as the threat of increasing coronavirus infections in parts of Europe and the United States curbed risk appetite and boosted gold demand for safe havens.
FILE PHOTO: Signage is in front of the entrance to the London Stock Exchange in London, UK. August 23, 2018. REUTERS / Peter Nicholls
European equities fell 0.3% at the open after German coronavirus reproduction rates increased from 1.06 on Friday to 2.88 on Sunday, health officials said.
The increase, mainly due to outbreaks in meat processing plants, harbors the possibility of renewed activity restrictions that could end an economic recovery.
"I see German R statistics as a red herring, or rather a statistical quirk," said Chris Bailey, Raymond James' European strategist.
"Corona virus on the edge remains an overhang, but the opening of Europe still looks much more solid than the US / America."
US equity futures rose 0.8% and infections continued to rise. In Asia, the Japanese Nikkei .N225 fell 0.2% and the broadest MSCI index for stocks in the Asia-Pacific region outside of Japan .MIAPJ0000PUS remained virtually unchanged.
Graphic: COVID-19 in the USA, Here
As further evidence that the United States was far from returning to normal, Apple (AAPL.O) said on Friday that it would temporarily close 11 U.S. stores as coronavirus cases increased in some states.
Because of these concerns, the gold XAU = 0.5% rose to $ 1,752 an ounce, near the May high of $ 1,764.8, the strongest since October 2012.
Record-breaking stimulus measures to combat the economic impact of the coronavirus pandemic will place much higher levels of debt on advanced economies than those accumulated during the 2008/09 financial crisis, Moody & # 39; s said in a report.
“The ratio of government debt to GDP will increase by around 19 percentage points, almost twice as much as in 2009 during the GFC. The increase in the debt burden will be more immediate and far-reaching, reflecting the severity and breadth of the shock that the coronavirus emits from the government. "Said Moody's.
The pandemic is increasing worldwide, and the World Health Organization reports a record increase in coronavirus cases worldwide on Sunday.
"The second wave is becoming an issue for markets," said Yoshinori Shigemi, global strategist at JPMorgan Asset Management.
“Whether there is a block can vary depending on the region. It will be a tough decision for politics. But they probably have no choice when they run out of hospital beds, ”he said.
Equities have been moving sideways in recent weeks as they have been torn between record stimulus and growing fear of second wave infections. They had risen more than 40% from their March lows, hoping that the worst pandemic was over.
Global stock market valuations are now at their highest level since 2002, compared to forecast earnings in the next 12 months.
Graphic: World stock market ratings, Here
Investors are also concerned about developments in Hong Kong after details of a new security law for the area have shown that Beijing will have cross-border enforcement powers.
China's top legislative body, the Standing Committee of the National People's Congress, will meet on June 28, and the Global Times reported that the Hong Kong security law is likely to be adopted by July 1.
Hong Kong's Hang Seng .HSI fell 0.7%, lagging regional markets.
The major currencies were largely stable. The euro was trading at EUR 1.1205 = and thus close to the lowest level in almost three weeks.
The yen was trading at JPY 106.92 per dollar, not far from a monthly high of 106.58 against the dollar earlier this month.
Oil prices rose due to tighter supply from major producers, but feared that the rising number of corona viruses could slow demand-tested profits.
Brent crude LCOc1 rose 0.8% to $ 42.48 a barrel. US CLc1 crude oil rose 0.4% to $ 39.89 a barrel.
Reporting by Thyagaraju Adinarayan, additional reporting by Hideyuki Sano; Edited by Larry King
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