Stocks go into reverse as virus fears resurface

Agence France-Presse

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European indices slip after a pessimistic growth forecast by the European Commission on Tuesday, July 7. Wall Street stocks also pull back.

WALL STREET. A view of the New York Stock Exchange is seen on Wall Street in New York City on March 23, 2020. File photo by Angela Weiss/AFP

NEW YORK, USA – Global stocks mostly fell on Tuesday, July 7, 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% 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% to end a streak of 3 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 5 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 2nd quarter earnings period, which begins in earnest next week. 

Companies in the S&P 500 are projected to suffer an average 43.8% drop in profits during a period devastated by coronavirus shutdowns, according to Factset.

In a rare incidence of upbeat business news, Samsung Electronics said on Tuesday it expects to see operating profit jump by 23% in the 2nd quarter, which is much better than the single-digit fall that analysts had forecast.

Back in the US, Walmart rose 6.8% following a report that the retail giant will soon launch a subscription service to compete with Amazon Prime.

Key figures around 8:40 pm GMT

  • New York – Dow: DOWN 1.5% at 25,890.18 (close)
  • New York – S&P 500: DOWN 1.1% at 3,145.32 (close)
  • New York – Nasdaq: DOWN 0.9% at 10,343.89 (close)
  • London – FTSE 100: DOWN 1.5% at 6,189.90 (close)
  • Frankfurt – DAX 30: DOWN 0.9% at 12,616.80 (close)
  • Paris – CAC 40: DOWN 0.7% at 5,043.73 (close)
  • EURO STOXX 50: DOWN 0.9% at 3,321.56 (close)
  • Tokyo – Nikkei 225: DOWN 0.4% at 22,614.69 (close)
  • Hong Kong – Hang Seng: DOWN 1.4% at 25,975.66 (close)
  • Shanghai – Composite: UP 0.4% at 2,245.34 (close)
  • West Texas Intermediate: DOWN less than 0.1% at $40.62 per barrel
  • Brent North Sea crude: DOWN less than 0.1% at $43.08 per barrel
  • Euro/dollar: DOWN at $1.1271 from $1.1309 at 9 pm 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 

– Rappler.com

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