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GLOBAL MARKETS-Europe breathes easier after second wave wipeouts

Published 22/09/2020, 07:02 pm
© Reuters.
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* Europe steadies after worst day in 3 months

* Asian shares weaker for second consecutive day

* Futures trading point to flat US opening

* Fresh lockdown worries, stimulus delay spook investors

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn

* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Sept 22 (Reuters) - Europe's stock markets clawed back some ground on Tuesday, a day after rising second waves of the coronavirus epidemic caused the region's biggest wipeout since June and drover investors back to government bonds.

Conditions were still choppy. South Korea and China's bourses had pulled Asia down for a second day after the tech-heavy Nasdaq fell out of its recent stellar range, so it was a relief for traders to see Europe stabilise.

The pan-European STOXX 600 index .STOXX made back 0.5% of the 3.2% it lost on Monday, helped by respective 1.5% and 0.6% gains for the tech .SX8P and healthcare sectors .SXDP . .EU

Travel and leisure stocks saw 0.3% falls to add to Monday's 5.2% plunge, however, and as investors stayed close to safety, yields on Germany's government bonds held near six-week lows and the dollar rose =USD . GVD/EUR

"The market may be taking a breather but I would be surprised if that was it," said Rabobank's Head of Macro Strategy Elwin de Groot, referring to Monday's rout that came as countries had been forced to reintroduce some of the COVID-19 restrictions they removed over the summer.

"The market won't like it. The base case was that the second wave wouldn't be as bad as the first... but the fourth quarter will be now another quarter with stringent restrictions and there are going to be an increasing number of economic victims," he said.

Concerns surfaced in the currency market, with both the euro EUR= and Britain's pound down around 0.3% GBP= against the dollar.

UK Prime Minister Boris Johnson will encourage Britons on Tuesday to go back to working from home, along with new curbs on pubs, bars and restaurants.

This came as France saw its seven-day daily rolling case count rise above 10,000 for the first time over the weekend, Italy introduced more mandatory testing and Germany describe the situation as "worrying".

Beyond the impact of the virus, Hong Kong shares of HSBC 0005.HK and Standard Chartered (LON:STAN) 2888.HK weakened a further 2%, after leaked reports showed they were among global lenders that have transferred more than $2 trillion in suspect funds over nearly two decades. globally have run hard on the weight of huge liquidity, so it's not surprising to see a pullback in some valuations," said James Rosenberg, an EL&C Baillieu advisor in Sydney.

"Add in uncertainty with U.S. elections and another COVID wave in Europe ... it unsettles investors."

BACK TO THE FUTURES

Australia's S&P/ASX 200 .AXJO had dropped 0.7%, pressured by miners and energy stocks and the Aussie dollar AUD= fell to a one-month low while Hong Kong's Hang Seng index .HSI had closed down nearly 1%.

Japanese markets were closed for a public holiday but early trading indicated a subdued day in store for Wall Street, with S&P 500 futures ESc1 down 0.18% and Nasdaq 100 futures NQc1 flat%.

U.S. stocks have tumbled over the past three weeks as investors dumped heavyweight technology-related shares following a stunning rally that lifted the S&P 500 and the Nasdaq to new highs.

JPMorgan (NYSE:JPM) JPM.N and Bank of New York Mellon (NYSE:BK) BK.N had fallen 3.1% and 4.0% respectively on Monday too. are also growing about a delay in U.S. stimulus measures after Congress has remained deadlocked for weeks over the size and shape of another coronavirus-response bill, on top of the roughly $3 trillion already enacted into law.

The death of U.S. Supreme Court Justice Ruth Bader Ginsburg appeared to make the passage of another package less likely before the Nov. 3 presidential election, sparking large declines in the healthcare sector.

Gold fell against the rising dollar, and traded at $1,908.76 per ounce, while in oil markets, Brent LCOc1 gained 0.4% to $41.65 and U.S. crude CLc1 rose 0.5% to $39.5 per barrel. O/R

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http://tmsnrt.rs/2jvdmXl Global currencies vs. dollar

http://tmsnrt.rs/2egbfVh Emerging markets

http://tmsnrt.rs/2ihRugV MSCI All Country Wolrd Index Market Cap

http://tmsnrt.rs/2EmTD6j

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