HONG KONG, May 21 — Stock markets mostly fell today after rallying for much of the week, with any gains dragged by profit-taking while concerns over the long-term impact of the virus and worsening China-US relations added to the selling pressure.
Equities have enjoyed weeks of advances thanks to signs the pandemic is easing in major economies and the gradual lifting of lockdown measures that are expected to have sent the world into a deep recession.
But that optimism has been tempered by uncertainty about the future, while Donald Trump has continued to target China over the outbreak and threatened fresh tariffs on the country, fuelling worries of another painful trade war between the superpowers.
In his latest volley, yesterday night he tweeted that “It was the ‘incompetence of China’, and nothing else, that did this mass Worldwide killing”.
He later accused counterpart Xi Jinping of being behind a “disinformation and propaganda attack on the United States and Europe”.
“It all comes from the top”, he said, adding that China was “desperate” to have former vice president Joe Biden win November’s presidential election.
Stephen Innes, of AxiCorp, warned that investors might not be taking the simmering tensions seriously enough.
“Markets may be pricing in far too much complacency as the US-China ‘phase one’ trade deal could be at risk, as the pandemic and resulting acute economic downturn have made China’s trade commitment to the US much more challenging to fulfil,” he said in a note.
Minutes from the Federal Reserve highlighted its concerns about the impact of the outbreak.
Policymakers were worried that “even after social-distancing requirements were eased, some business models may no longer be economically viable”.
This would be the case especially if consumers decide to “avoid participating in particular forms of economic activity”, the minutes said.
Europe back in the air?
The World Health Organisation said 106,662 virus cases were reported Tuesday, the biggest daily jump since the disease broke out in December, with Latin America now of particular concern.
Tokyo ended down 0.2 per cent, Shanghai shed 0.6 per cent and Hong Kong fell 0.5 per cent with Sydney 0.4 per cent off. Singapore dropped 0.1 per cent and Wellington also gave up 0.5 per cent.
London dropped 0.8 per cent at the open while Paris and Frankfurt dropped more than one per cent.
However, Mumbai, Seoul, Taipei, Kuala Lumpur and Manila were all in positive territory.
But while uncertainty reigns, traders continue to take heart from the good news, with European Union tourism ministers holding a virtual meeting, while Greece unveiled plans to let seasonal hotels reopen from June 15 and international flights resume on July 1.
Italian airports were given the go-ahead to reopen from June 3, including for international flights, while Britain’s EasyJet said it would be back in the air on June 15, with “a small number of flights”.
Meanwhile, researchers reported progress from a study involving monkeys that looked at a prototype vaccine and another on whether infection with Covid-19 provides immunity against re-exposure.
That came days after US firm Moderna said early tests of a possible vaccine had been successful.
“Rollback continues to support risk sentiment with markets optimistic that economic activity will rebound sharply,” said National Australia Bank’s Tapas Strickland.
“Vaccine hopes also continue... The developments again reinforce for markets it’s a matter of when, rather than if for a vaccine.” — AFP
