Global stocks hold steady as economies unwind lockdowns

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 8, 2019. REUTERS/Brendan McDermid

Global stock markets wavered between modest gains and losses on Tuesday as governments grapple with the challenge of easing lockdowns while reducing the risks of a second wave of infections.

Shares on Wall Street opened higher, leaving its benchmarks on track for a fourth successive day of gains. The S&P 500 and the tech-heavy Nasdaq Composite both gained 0.4 per cent in the first minutes of trading.

Investors are closely watching the reopening of major economies, looking for signs of any flare-ups of the virus that could stall progress.

The UK has outlined a plan to slowly unwind its lockdown, while New York is poised to begin reopening, having passed the critical phase of its coronavirus ordeal, the state’s governor declared on Monday.

Economists at HSBC said real-time data point to a slow and steady recovery of economic activity in Europe, but that risk appetite for the region’s markets “remains limited”.

European markets recovered from a negative open to nudge higher in afternoon trading. London’s FTSE 100 climbed 1 per cent, boosted by rallies in Vodafone and Kingfisher, while the composite Stoxx Europe 600 index rose 0.2 per cent.

Stocks across Asia softened on new concerns over the impact of coronavirus in the region. Jim Reid, strategist at Deutsche Bank, said a pick-up in cases among economies that had reopened was one of the causes for the modest selling.

Fears have emerged over a possible second wave of infections in parts of Asia, with Wuhan — the origin of the virus in China — this week reporting its first cluster of new infections since relaxing quarantine measures.

South Korea’s Kospi index dropped 0.7 per cent after authorities reported a cluster of fresh Covid-19 infections tied to an outbreak in Seoul’s nightlife district.

Hong Kong’s benchmark Hang Seng fell 1.4 per cent, while Japan’s Topix slipped 0.3 per cent.

Stock markets have rallied in recent weeks on optimism that the global economy will make a V-shaped recovery once policymakers manage to contain the disease. But some investors believe markets will struggle to mount further gains.

“Despite the recent gains made by US large-caps, we think it’s likely a stretch for investors to chase the move much higher from here,” warned Eoin Murray, head of investment at Federated Hermes International.

Oil prices were higher a day after leading producer Saudi Arabia said it would reduce output by another 1m barrels a day from next month in a bid to shore up prices.

Brent crude, the international benchmark, was up 2.4 per cent at just above $30 a barrel. West Texas Intermediate, the US marker, rose 5 per cent to $25.55.

Donald Trump, the US president, welcomed the rise in the oil price, saying the US energy industry was “starting to look very good again”.

The yield on US government bonds edged lower, with the 10-year note slipping 0.01 percentage points to 0.7193 per cent.

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