Band Marc Jones
LONDON, July 19 (Reuters) – Risk aversion reigned supreme on Monday as an increase in coronavirus cases around the world pushed bond yields down and left stocks facing their longest streak of losses since the pandemic first hit them. world markets 18 months ago.
The European STOXX 600 .STOXX slipped more than 2% in its worst session in seven months; London FTSE .FTSE fell by a similar amount to the lowest since mid-May as Britain’s ‘Freedom Day’ lift of COVID-19 restrictions was eclipsed by its fully vaccinated health minister who contracted the virus.
The Dow Jones Industrial Average .DJI fell 1.4% at the start of US trading, with the S&P 500 .SPX and the Nasdaq Composite .IXIC almost corresponding to these falls.
Meanwhile, safe haven government bonds GVD / EURWE/ posted strong gains, with 10-year US Treasury yields sliding to new five-month lows as the dollar climbed to a 3.5-month high. / FRX
“The big concern in the market is whether we are going to see a slowdown in the global economic recovery, and this could be the dominant force leading to a bad period for stocks in the weeks to come,” said Russ Mold, chief executive officer. investments in AJ Bell brokerage.
In Asia, the Nikkei of Japan .N225 and Hang Seng from Hong Kong HSI fell 1.3% overnight. Cases hit an 11-month high this weekend in Singapore, Thailand saw its biggest single-day increase since the pandemic began, and Sydney construction workers were urged to lower tools after cases have also increased there.
Markets were worried about whether wider closures might be needed again and a slowdown in China, the world’s second-largest economy, meaning a recent surge in commodity prices could peak.
Natwest’s global head of office strategy John Briggs said rising COVID-19 cases would focus markets’ attention on countries with the highest vaccination rates, their appetite for social restrictions and their tax appetite.
“The United States is leading all of this,” Briggs added. “We are in a period of renewed American exceptionalism … So this is all bullish for the dollar.”
In Europe, coronavirus anxiety has seen travel and leisure stocks .FTNMX405010 fall to their lowest level of the year. Carnival cruise operator actions CCL.L, easyJet airlines EZJ.L and IAG, owner of British Airways ICAG.L, and the UK restaurant group RTN.L and Cineworld cinema channel CINE.L all fell between 5% and 6%. .UE
It wasn’t just COVID-19 that cooled the mood. Oversized Chinese tech trio Baidu, Alibaba and Tencent fell 2.5% to 3% overnight after a Shanghai court over the weekend released a list of “typical cases of unfair competition.” .SS
Oil prices fell about 4% after the OPEC group of producing countries overcame a recent spat and agreed to increase production in a hastily-organized meeting on Sunday. OR
Brent raw LCOc1 was down $ 2.80 to a more than six week low at $ 70.75 a barrel. american crude CLc1 fell a similar amount to $ 68.84 a barrel.
Global economic growth is starting to show signs of fatigue as many countries struggle to contain the highly contagious Delta variant of the coronavirus.
Investors are also worried about the specter of high inflation, which the market has long feared.
Bank of America economists have lowered their forecast for economic growth in the United States this year to 6.5%, from 7% previously.
In bond markets, the switch to safe-haven securities led to a further decline in yields. German 10-year bond yield DE10YT = RR hit its lowest level since late March at -0.351% ahead of an ECB meeting this week. 10-year US Treasury yields US10YT = RR slipped to 1.21% and fell for 11 of the last 15 trading sessions.
The dollar = USD was also up as risky currencies came under pressure. An index measuring the dollar’s value against a basket of major currencies briefly hit 93,041, its highest since early April.
But the dollar did not advance against the yen, with the currency pair trading below 110 yen to the dollar at 109.10, leaving the yen up nearly 0.9% that day. JPY =
The British pound hit a three-month low against the dollar at $ 1.3703 GBP = D3GBP / after his Minister of Health, Sajid Javid, tested positive for COVID-19. This forced Prime Minister Boris Johnson and Finance Minister Rishi Sunak to self-quarantine on Sunday.
“Despite rising vaccination rates, a return to pre-corona normality seems questionable,” wrote Ulrich Leuchtmann, head of currency and commodities research at Commerzbank, in a research note.
Global number of new COVID-19 caseshttps://tmsnrt.rs/3eufysU
(Additional report by Karin Strohecker; Editing by Edmund Blair and Timothy Heritage)
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