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GLOBAL MARKETS-Shares nudge up as Wall Street record outweighs jitters on growth

Published 19/08/2020, 06:26 pm
© Reuters.
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* Euro STOXX 600 up 0.2%

* BA owner and Easyjet gain on shorter quarantine hopes

* Oil and gas, utilities, miners fall

* Dollar claws away form 27-month low

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

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

By Tom Wilson

LONDON, Aug 19 (Reuters) - European stocks edged up on Wednesday as a record high for U.S. stocks outweighed simmering worries over a resurgence in coronavirus cases that could undermine a nascent recovery.

The broad Euro STOXX 600 .STOXX gained 0.1% in choppy trading, with indexes from Frankfurt .GDAXI to London .FTSE making slim gains.

Among the bright spots were travel and leisure shares, with British Airways owner ICAG.L up 3.7% on a British plan use COVID-19 testing at London's Heathrow Airport to help shorten the number of days that travellers have to spend in quarantine. oil and gas .SXEP , utilities .SX6P and mining .SXPP shares weighed, with BP BP.L and Royal Dutch Shell RDSa.L losing around 0.6% as crude prices fell on worries about demand and rising COVID-19 cases in Europe.

Early moves in Europe mirrored a volatile session for Asian shares, where losses in Chinese and Hong Kong stocks erased an earlier push to a seven-month high.

MSCI's broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS fell 0.2%, after initial support from an S&P 500's .SPX charge to a record high powered by looser policy and charging tech stocks.

Wall Street futures ESc1 pointed to slim gains.

Strategist said the tepid performance in Europe and Asia was symptomatic of growing focus for investors: where to put money before a coronavirus vaccine is found.

Money has poured into U.S. growth stocks -- the tech giants and retail titans that have benefited most from the recovery -- as investors worry that in the absence of a vaccine a rise coronavirus cases could further hurt "value" shares.

"It's hands down the biggest dilemma out there at the moment," said Mike Bell, global market strategist, at J.P. Morgan Asset Management.

"If you get a vaccine you are going to see a big rotation out of the stocks that have done very well this year - the growth stocks, the tech stocks - into the beaten up value stocks - the hotels, the airlines."

Overnight, U.S. stocks set records as investors gravitated to the stay-at-home winners from COVID-19 lockdowns such as Amazon AMZN.O and Netflix NFLX.O .

The benchmark S&P 500 surpassed its February all-time high, hit just before the onset of the COVID-19 pandemic pummelled stocks to lows on March 23.

It has surged about 55% since those lows, fuelled by monetary stimulus packages even as alarm bells ring over the underlying health of the economy and negotiations over fiscal stimulus in Washington drag on.

DOLLAR FLOORED

The U.S. Federal Reserve's intervention in financial markets to maintain liquidity has pushed riskier assets to all-time highs and reduced demand for safe-havens, battering the U.S. dollar.

In early trading, the greenback =USD clawed away from a 27-month low touched a day earlier, gaining 0.1% against a basket of currencies to 92.256.

"The U.S. dollar left the building overnight," said Jeffrey Halley, senior market analyst at Oanda, citing the prospect for further loosening of policy by the Federal Reserve as the trigger.

Financial markets have "realised that the U.S. government could issue as much debt as it wants".

Markets were also paying close attention to minutes from the Fed's recent meeting due later in the day for any hints on what the Fed could announce in September.

Some investors speculated the Fed will adopt an average inflation target, which would seek to push inflation above 2% for some time.

In commodities, Brent crude futures LCOc1 fell 45 cents, or 0.6%, to $45.19 a barrel, on concerns that U.S. fuel demand may not recover as quickly as expected amid stalled talks on an economic stimulus package. O/R

For Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/

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