NEW YORK: Equity markets slid on Thursday after US data raised worries about the economy’s recovery and doused enthusiasm that drove a Chinese stock rally for an eighth straight day, while the dollar gained as new coronavirus cases hit another record.
The dollar had struggled earlier in the session, with China’s yuan climbing to a four-month peak, as investors poured into Chinese stocks on growing signs of a recovery that also helped lift copper prices to more than a year high.
But concerns about renewed US coronavirus lockdowns kept a lid on oil prices, too, and outweighed signs of a pick-up in US gasoline demand. A slowing rate of decline in weekly US jobless claims from a peak in March also gave investors pause.
Rising coronavirus cases and slower improvement in the US jobs market amounted to a one-two punch for the market.
“We are reaching the levels of unemployment which are likely to persist until a more true re-opening can occur, either with a vaccine, novel treatment, or time,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia.
The MSCI world equity index, which tracks shares in 49 nations, retreated after earlier gains. The index fell 0.8 per cent after its broadest measure of Asia-Pacific shares outside Japan rose 0.66pc on the China rally.
Wall Street also fell. The Dow Jones Industrial Average slid 1.58pc, the S&P 500 lost 1.20pc and the Nasdaq Composite dropped 0.51pc.
In Europe, stocks pared gains to close lower. Europe’s broad FTSEurofirst 300 index dropped 0.78pc.
More than 60,000 new coronavirus infections were reported on Wednesday and US deaths rose by more than 900 for a second straight day, the highest since early June.
Jobless claims have been gradually falling, though they remained roughly double their highest point during the 2007-09 Great Recession.
Initial claims for state unemployment benefits totalled a seasonally adjusted 1.314 million for the week ended July 4, down from 1.413m the prior week, the Labor Department said. Oil prices fell about 3pc as investors worried that renewed US lockdowns to contain the spread of coronavirus would sap fuel consumption.
“Covid-19 cases continue to increase in the US and traders wonder when they will see an end of this, when the trend will change,” said Louise Dickson, oil markets analyst at Rystad Energy.
Brent crude futures fell 0.79pc at $42.5 a barrel. US crude slid 2.79pc at $39.76 a barrel.
Overnight in Asia, Chinese stocks set their longest winning streak in two years, and the yuan had strengthened past 7pc , despite rising tension over Hong Kong and the economic uncertainty caused by Covid-19.
It was the Shenzhen blue-chip index’s eighth straight day of gains, adding another 1.5pc to its 16pc surge this month, and it helped Europe initially on an upward trajectory after hesitation caused by uninspiring German data.
Published in Dawn, July 10th, 2020
