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Stocks pull back, weighing vaccine hopes against virus fears


17 July 2020 09:00 am - 0     - {{hitsCtrl.values.hits}}


LONDON (AFP) - Stock markets pulled back yesterday as investors, weighing hopes for a coronavirus vaccine against fears of new waves of infections, consolidated recent gains.

US and European markets were all weaker, but limiting their downside to about half a percent, with “spiking new COVID-19 cases appearing to continue to foster some uneasiness, along with escalating U.S. and China tensions”, said analysts at Charles Schwab.

Some upbeat US data helped limit losses, they said, pointing to stronger-than-forecast retail sales numbers published just before Wall Street’s opening bell.

The euro recovered against the dollar after the European Central Bank presented no surprises at a policy meeting.

But ECB chief Christine Lagarde leaned on EU governments, who have in the past left much of the heavy lifting to the central bank, to do more to kickstart their economies suffering from the pandemic. The ECB meeting came on the eve of an European Union summit in Brussels where leaders will wrangle over a proposed 750-billion-euro ($847-billion) recovery fund.

Earlier yesterday, Asian equities dropped as investors fretted over fresh spikes in virus infections around the world and the reimposition of lockdowns.

Forecast-busting economic growth data out of China were unable to break through the unease on trading floors.

Geopolitical tensions, particularly between China and the United States, were also fanning uncertainty.

Beijing said the world’s second biggest economy expanded 3.2 percent in the second quarter, much better than the 1.3 percent tipped in an AFP poll of economists, indicating China is well on the road to recovery.

However, analysts said investors had largely priced in an upturn and pointed to a worse-than-expected drop in retail sales in June suggesting consumers are still reluctant to spend.The head of the International Monetary Fund has warned that the world economy was “not out of the woods”, despite signs of improvement, with challenges including a possible second wave of infections.

Oil markets dropped after rallying more than two percent Wednesday as investors were looking to an expected pick-up in output from major producers who embarked on massive cuts this year to fight a global glut. 

However, the OPEC+ grouping expects the increase in oil will be offset by improving demand and compensatory reductions by countries that had not made big enough cuts previously.


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