Stocks were mixed on Wednesday and the dollar slipped as investors continued to find appetite for risk assets despite a continuing acceleration in coronavirus cases across the American sun belt.
Gains for Hong Kong shares at the open fizzled, while Japan’s Topix slipped. Equities in Seoul outperformed after Kim Jong Un suspended military actions against South Korea. The dollar headed for a third straight day of declines. Treasuries were flat. New Zealand’s dollar reversed gains after the central bank said the balance of economic risks remained to the downside. On Tuesday, the S&P 500 closed well off its earlier 1.2% gain on reports that a surge in cases in several hotspots in the South and Southwest of the U.S. threatened to derail plans to ramp up reopenings. Still, the Nasdaq Composite hit another record high.
Investors are betting that trillions of dollars in stimulus by central banks and governments around the globe will shield economies from a resurgence in virus breakouts. PMIs for June showed business activity in the world’s largest economy continuing a rebound that started in May.
“Bad news isn’t so bad if we think that that means more stimulus,” said Nela Richardson, an investment strategist at Edward Jones. The markets are responding also to the quick action, quickest in any recession going back to the Great Depression, of the Federal government and monetary authorities, not just in the United States, but around the world.”
On the virus front, Anthony Fauci, the U.S.’s top infectious-disease doctor, warned Tuesday that the coronavirus isn’t taking a summer break, judging from its persistent spread in the U.S. Sun Belt. A German state locked down a municipality where 1,553 workers tested positive at a single meat factory.
Here are some key events coming up:
- The IMF will release new 2020 growth projections on Wednesday.
- U.S. jobless claims, durable goods and GDP data are due Thursday.
- A rebalance of Russell indexes is due on Friday.
These are the main moves in markets:
Stocks
- Futures on the S&P 500 fell 0.1% 12:44 p.m. in Tokyo. The index rose 0.4% Tuesday.
- Japan’s Topix Index dipped 0.4%.
- Hang Seng was little changed.
- Shanghai Composite rose 0.2%.
- Kospi index rose 1.6%.
- Euro Stoxx 50 futures lost 0.7%.
Currencies
- The yen was at 106.53 per dollar.
- The offshore yuan held at 7.0580 per dollar.
- The Bloomberg Dollar Spot Index fell 0.2%.
- The euro bought $1.1323, up 0.1%.
Bonds
- The yield on 10-year Treasuries edged up to 0.72%.
- Australian 10-year yields ticked up to 0.93%.
Commodities
- West Texas Intermediate crude fell 0.7% to $40.08 a barrel.
- Gold was at $1,768.93 an ounce.
Source: Bloomberg
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