Equity markets mixed as virus, vaccine worries simmer
Stocks were
mixed Wednesday as virus concerns returned to the fore with several countries
reimposing lockdown measures to fight a surge in new infections and the halting
of two trials denting hopes for a vaccine or treatment being developed anytime
soon.
Analysts said investors had
also by now priced in any expectations for Democratic sweep of the White House
and Congress in next month's elections that many expect will see a ramped-up
new stimulus for the beleaguered US economy.
Fears for the economic recovery
have mounted in recent weeks because of a Covid-19 resurgence, particularly in
Europe where governments are resorting to new controls while trying to avoid
the devastating nationwide lockdowns of March and April.
But the Netherlands is set to
go into "partial lockdown" later Wednesday, with all bars, cafes and
restaurants to close for at least two weeks, while France is expected to
announce tighter restrictions and faster testing that some media speculated
could see evening curfews in Paris.
And in Britain,
Prime Minister Boris Johnson, whose country has the highest death toll in
Europe, on Monday ordered pubs in Liverpool to shut as part of a new strategy,
while others face fresh containment measures.
The moves come as
pharmaceuticals giant Johnson & Johnson said it had temporarily halted its
vaccine trial after a participant fell sick, which was followed by news that
Eli Lilly had also paused testing of an antibody treatment out of safety
concerns.
"Anxiety over
second-wave resurgence of Covid-19, which is now apparent in many major
economies, is... clouding the view where the question remains how activity
curtailment measures feed through into economic and mobility activity,"
said Axi strategist Stephen Innes.
"And on that front, risk
has also deteriorated as participants mulled the implications of another
vaccine trial setback."
OANDA's Jeffrey Halley added:
"The emphasis is on temporary... and trials will more than likely resume
quickly. It does, however, highlight the realities of vaccine development, even
in accelerated Covid-19 environment."
Stimulus saga drags on
All three main indexes on
Wall Street fell and Asia also struggled.
Shanghai dropped 0.6%, with
little reaction to a speech by Xi Jinping in which he reaffirmed a commitment
to open up the Chinese economy.
Sydney, Seoul, Taipei and
Manila all turned negative. Singapore shed 0.7% after data showed the
city-state's economy contracted seven percent in the third quarter.
Still, Hong Kong, Tokyo,
Manila, Wellington and Jakarta edged up.
London and Frankfurt edged up
in early trade but Paris dipped.
The chances of a new US
stimulus dimmed further after House Speaker Nancy Pelosi immediately rejected a
Republican offer to pass targeted measures for small businesses, while Donald
Trump even tweeted his party should "Go big or go home!!"
Democrats have said they will
not budge on their $2.2 trillion offer while the president already hiked the
Republican plan to $1.8 trillion - but which many in the party have said is too
big.
"For now it is hard to
see a deal being agreed before November 3, the market is still travelling with
the notion that a new round of stimulus is coming, but at this stage this looks
more likely after the election," said Rodrigo Catril at National Australia
Bank.
"A (Joe) Biden win
increases the prospect of a big stimulus especially if it comes with a Blue
Wave while a Trump win suggest a stimulus package is likely to be smaller amid
the prospect of a still divided Congress."
Sterling weakened as a
deadline set by the British to reach a post Brexit trade deal approaches on
Thursday with no sign of a breakthrough in talks, with France's foreign
minister warning the possibility they will not find an agreement was "very
real".
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