Global stocks sink as safe-haven assets gain

Investors hope Europe will continue to rebound from economic damage of coronavirus

NEW YORK: Global equities sank and perceived safe-haven assets like US Treasuries and gold gained on Friday as investors weighed hopes that Europe will continue to rebound from the coronavirus pandemic’s economic damage against concerns over a record surge in new Covid-19 infections in the United States.

The euro zone is “probably past” the worst of the economic crisis, European Central Bank President Christine Lagarde said, while urging authorities to prepare for a possible second wave. There were at least 39,818 new coronavirus cases across the United States on Thursday, the largest one-day increase yet.

The governor of Texas temporarily halted the state’s reopening as infections and hospitalisations surged. MSCI’s gauge of stocks across the globe shed 1.25% following broad declines in Europe and slight gains in Asia. The index is up approximately 40% since its March lows.

“Even though we continue to see some pretty scary virus numbers coming out of the US, it’s not really dented sentiment - not to any sustained degree at least,” said Timothy Graf, head of macro strategy for EMEA at State Street Global Markets.

The euro gained versus the US dollar and was on track for its biggest weekly rise in three weeks after the ECB reaffirmed its dovish stance in the minutes of its latest policy meeting.

Concerns about the economic fallout from the surge in US coronavirus cases helped bolster perceived safe havens. Spot gold added 0.3% to $1,766.71 an ounce. US gold futures gained 0.15% to $1,764.70 an ounce.

Credit Suisse changed its position on global equities to “neutral” from “overweight,” saying it was taking profits after the recent rally, but kept its overweight positions in credit markets.

Record high inventories and fears of declining demand pushed oil prices lower. US crude recently fell 1.42% to $38.17 per barrel and Brent was at $40.68, down 0.9% on the day.

Published in The Express Tribune, June 27^th, 2020.

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