Stocks go into reverse as virus fears resurface

·3-min read
Dealing rooms went risk-off again
Dealing rooms went risk-off again

Global stocks mostly fell Tuesday as fears sparked by fresh lockdowns and bad economic news prompted profit-taking after strong gains the previous session. European indices slipped after a pessimistic growth forecast by the European Commission which said the eurozone economy will contract by 8.7 percent in 2020 due to the coronavirus crisis. Chris Beauchamp, chief market analyst at IG trading group, said the EU outlook pours "cold water on the economic recovery narrative that had held sway over the past few sessions thanks to data from the US and China." Wall Street stocks also pulled back, with the Nasdaq finishing down 0.9 percent to end a streak of three straight records at 10,343.89. Sentiment in Europe and the United States was also undermined by a bout of late selling in Chinese markets, although Shanghai managed a slightly firmer close. "Investors are pausing for breath," observed Fiona Cincotta, analyst at City Index. The easing of lockdown measures and reopening of economies has been the key driver of a months-long charge across equities, but a new surge of infections in several countries gave investors pause. Melbourne, Australia's second-biggest city, has locked down more than five million residents after virus cases there spiked. Fawad Razaqzada at ThinkMarkets said it was unclear whether Tuesday's pullback was just a limited retracement "or something more significant." For now, he said, "the path of least resistance remains to the upside despite today's weakness." Investors are beginning to focus on the upcoming second-quarter earnings period, which begins in earnest next week. Companies in the S&P 500 are projected to suffer an average 43.8 percent drop in profits during a period devastated by coronavirus shutdowns, according to Factset. In a rare incidence of upbeat business news, Samsung Electronics said Tuesday it expects to see operating profit jump by 23 percent in the second quarter, which is much better than the single-digit fall that analysts had forecast. Back in the US, Walmart rose 6.8 percent following a report that the retail giant will soon launch a subscription service to compete with Amazon Prime. - Key figures around 2040 GMT - New York - Dow: DOWN 1.5 percent at 25,890.18 (close) New York - S&P 500: DOWN 1.1 percent at 3,145.32 (close) New York - Nasdaq: DOWN 0.9 percent at 10,343.89 (close) London - FTSE 100: DOWN 1.5 percent at 6,189.90 (close) Frankfurt - DAX 30: DOWN 0.9 percent at 12,616.80 (close) Paris - CAC 40: DOWN 0.7 percent at 5,043.73 (close) EURO STOXX 50: DOWN 0.9 percent at 3,321.56 (close) Tokyo - Nikkei 225: DOWN 0.4 percent at 22,614.69 (close) Hong Kong - Hang Seng: DOWN 1.4 percent at 25,975.66 (close) Shanghai - Composite: UP 0.4 percent at 2,245.34 (close) West Texas Intermediate: DOWN less than 0.1 percent at $40.62 per barrel Brent North Sea crude: DOWN less than 0.1 percent at $43.08 per barrel Euro/dollar: DOWN at $1.1271 from $1.1309 at 2100 GMT Dollar/yen: UP at 107.54 yen from 107.35 yen Pound/dollar: UP at $1.2541 from $1.2492 Euro/pound: DOWN at 89.87 pence from 90.53 pence burs-jmb/cs