Stock markets end mostly lower after strong run

NEW YORK, USA – Global stock markets mostly fell on Tuesday, June 9, as investors locked in profits from a strong recent run, with analysts saying that equity valuations had started to look too optimistic, prompting a reality check.

Dire corporate and economic news in the eurozone sparked selling in Europe. The Dow and S&P 500 also retreated ahead of a Federal Reserve policy decision, although the Nasdaq powered to its second straight record.

The Fed began its two-day meeting, the first since the United States economy began to meaningfully reopen from the coronavirus shutdowns that froze much activity in March, April, and part of May. The gathering also comes after the surprisingly good jobs report last Friday, June 5.

Despite the better jobs data, analysts do not expect the central bank to change course from its aggressive stimulus.

Stocks have risen considerably from March lows as economies have begun reopening and as authorities enact unprecedented stimulus. Those gains have sparked questions about whether markets have risen too much.

There is a “disconnect between the record-breaking stock market rally and stretched valuations,” OANDA analyst Edward Moya told Agence France-Presse.

In Europe, a big French government package for the country’s aviation industry meanwhile did little for the affected companies’ share prices, analyst Neil Wilson said at trading site Markets.com.

“Some big names in France – Airbus, Safran, Thales, and Dassault – turned sharply lower even as the French finance minister unveiled a 15-billion-euro support plan for the aerospace industry,” Wilson said.

In economic news, the Bank of France predicted the French economy would shrink by about 10% this year on the fallout from COVID-19.

In Europe’s biggest economy Germany, exports tumbled 24% month-on-month in April to 75.7 billion euros ($85.5 billion), official data showed.

Tuesday’s round of heavy European losses came after Tokyo ended a 6-day winning streak.

Nevertheless, Asian equities mostly rose as long-running optimism over the reopening of economies eclipsed early profit-taking.

Seoul gained 0.2% despite intensifying geopolitical concerns after North Korea said it was severing all communication links with South Korea.

Oil prices retreated further on skepticism over a weekend deal to extend output cuts from key crude producing nations. – Rappler.com