Global stocks limp higher after Wall Street indexes crashed the most since June, but tougher COVID-19 rules in Europe and the US election cap gains
Reuters / Brendan McDermid
- Global stocks limped higher on Thursday after the biggest one-day loss on Wall Street since June, but new lockdowns in Europe and next week's US election were curbing gains.
- European stocks rose in the range of 0.2% to 0.7% and US futures rose as much as 1%.
- "The overnight misery on the most toxic combination of more stringent mobility restrictions, traders unwilling to add risk ahead of the US election next week, and the pre-election US stimulus impasse has seemingly abated for now," said Stephen Innes, chief global market strategist at Axi.
- Most Asian markets edged modestly lower after Reuters reported that Joe Biden would immediately consult with America's main allies on the future of US tariffs on China.
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Global stocks recovered slightly on Thursday from carnage the previous day, when Wall Street indices crashed by the most since June, as record numbers of new cases of COVID-19 in the United States and new lockdowns in Europe began to erode optimism over the economic outlook.
Led by modest gains on the European market, US stock futures edged higher, following a 3% drop the day before.
The Euro Stoxx 50 rose 0.2%, London's FTSE 100 rose 0.4%, and Frankfurt's DAX rose 0.7%.
Oil and gas stocks benefitted from a rally in shares of Royal Dutch Shell, which beat expectations with its third-quarter results, while among the laggards were travel and retail stocks, highlighting the concern about consumer spending, as lockdown measures tighten across Europe.
"The overnight misery on the most toxic combination of more stringent mobility restrictions, traders unwilling to add risk ahead of the US election next week, and the pre-election US stimulus impasse has seemingly abated for now," said Stephen Innes, chief global market strategist at Axi.
US futures tied to the S&P 500, Dow Jones, and Nasdaq rose between 0.7% and 1%.
After France and Germany announced a new round of four-week national lockdowns, the eurozone is now at the forefront of concerns around end-demand leaning against global risk sentiment, Innes said.
Although the new measures to restrict movement have hit stocks and oil hard, this effect may prove to be fairly short-lived, according to UBS.
"While local restrictions to control the pandemic will be a drag on growth, we see several reasons to expect the effect is likely to be more limited than in the first half of the year," said Mark Haefele, chief investment officer at UBS Global Wealth Management. "As a result, we believe the setback to risk assets is likely to be relatively short-lived and investors should stick to their financial plan. We continue to see upside over the medium term."
With ten vaccine candidates in late-stage trials globally, UBS expects restrictions to be lifted by the second quarter next year, which would help corporate earnings recover to pre-pandemic levels by the end of 2021. The Swiss bank also expects another sizeable fiscal stimulus to pass regardless of who wins the presidency.
Asian markets edged only modestly lower after Reuters reported that Joe Biden would "consult allies" on the future of US tariffs on China if he gets elected.
While China's Shanghai Composite rose 0.1%, Hong Kong's Hang Seng fell 0.4%, and Japan's Nikkei fell 0.3%.
Oil tumbled after equity markets fell on Wednesday, with Brent Crude down 3.1% at $38.38 a barrel, while West Texas Intermediate down 3.4%, to $36.12 a barrel.
Gold and silver were unable to escape the high correlation to large equity sell-offs. Gold was down 0.2% at $1,877 an ounce, while silver fell 0.7% to $23.20 an ounce.