Earnings put floor under European stocks amid concerns over Covid cases in Asia
Optimism about vaccination is shifting to concern that travel restrictions will act as a brake
Global stocks gained on Wednesday as early indications of a rebound in European corporate earnings offset concerns over rising Covid-19 infections in Asia that have dampened oil prices.
The Stoxx index of 600 European shares was up 0.7 per cent at 436.76 points. Analysts said a 1.9 per cent fall on Tuesday, its worst session this year, was overdone and the benchmark remains near its record high of 443.61 points hit on Monday.
MSCI’s index of global shares fell 0.2 per cent. It too had reached record highs on Monday.
Recent optimism about rising vaccination rates in the United States, Britain and the European Union is shifting to concern that record coronavirus infections in India and a reinforcement of travel restrictions will act as a brake on the world economy.
Stocks in Tokyo also slumped by 2 per cent due to the growing likelihood that Tokyo, Osaka and surrounding areas will be put under lockdown due to a new wave of coronavirus infections.
Europe kicked off an earnings season that is expected to deliver 61 per cent profit growth, its biggest surge in more than nine years, on the back of recovery from economic lockdowns.
Tech stocks were the top gainers, up almost 2 per cent, with semiconductor equipment maker ASML jumping 5.4 per cent after it raised its full-year sales forecast, citing strong demand amid a global computer chip shortage.
Crude futures extended declines from a one-month high on speculation that coronavirus restrictions in India, the world’s third-largest oil importer, will hurt energy demand.
U.S. crude dipped 0.4 per cent to $62.44 a barrel, while Brent crude fell 0.2 per cent to $66.40 per barrel.
“Renewed concerns about the global economic recovery weighed on commodity prices and commodity currencies. Many countries around the world, such as India and Brazil, set new records for infections and deaths,” analysts at Commonwealth Bank of Australia said in a research note.
S&P 500 e-mini stock futures were slightly firmer, indicating a potential modest rebound from Tuesday’s selloff on Wall Street.
The Dow Jones Industrial Average fell 0.75 per cent, the S&P 500 lost 0.68 per cent, and the Nasdaq Composite fell 0.92 per cent on Tuesday as investors sold airlines and travel-related shares due to fear of a delayed recovery in global tourism.
Some tech shares and companies that benefited from stay-at-home demand could face further pressure on Wednesday after Netflix Inc reported disappointing subscriber growth for its movie streaming service, which sent its shares down 11 per cent in after-hours trading.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.1 per cent. Australian stocks dropped 0.3 per cent but shares in China recouped early losses and rose 0.3 per cent due to positive earnings from the healthcare and banking sectors.
The dollar index against a basket of six major currencies traded 0.2 per cent higher at 91.358.
Investors are closely watching an auction of 20-year US Treasuries later on Wednesday, which will be an important gauge of global demand for fixed income.
Ahead of the auction results, the yield on benchmark 10-year Treasury notes traded at 1.5767 per cent, near a six-week low.
In a sign of growing risk aversion, spot gold traded at $1,781.40 per ounce, close to a seven-week high reached on Monday. – Reuters