LONDON (Reuters) – Global stocks rallied Wednesday as early indications of a recovery in European corporate earnings offset concerns about rising COVID-19 infections in Asia that have dampened oil prices.
The STOXX index of 600 European stocks rose 0.7% to 436.76 points. Analysts said a 1.9% drop on Tuesday, the worst session of the year, was exaggerated and the benchmark remains close to its all-time high of 443.61 points on Monday.
The MSCI index of global equities fell 0.2%. This one too had reached record highs on Monday.
“We’ve seen about seven weeks of profit based on the recovery trade,” said Michael Hewson, chief market analyst at CMC Markets.
“It was priced to perfection, and with events in Japan and India outpacing earnings, there might be a few dips along the way, a little bit of risk adjustment,” Hewson said.
Recent optimism about rising vaccination coverage in the United States, Britain and the European Union is shifting to concerns that record coronavirus infections in India and tightening travel restrictions will hold back the global economy.
Stocks in Tokyo also fell 2% due to the increasing likelihood that Tokyo, Osaka and surrounding areas will lock up due to a new wave of coronavirus infections.
Europe entered an earnings season expected to deliver 61% earnings growth, the largest increase in more than nine years, thanks to the recovery from economic blockages.
Technology stocks were the biggest winners, up nearly 2%, with semiconductor equipment maker ASML jumping 5.4% after raising its sales forecast for the year, citing strong demand due to a global shortage of computer chips. But Italian football club Juventus fell 10% after the escaped European Super League was shaken by the departure of its six English clubs. Sections.
Crude futures extended its declines from a month high following speculation that coronavirus restrictions in India, the world’s third largest oil importer, will hurt energy demand.
US crude oil fell 0.4% to $ 62.44 a barrel, while Brent crude oil fell 0.2% to $ 66.40 a barrel.
“Renewed concerns about the global economic recovery weighed on commodity prices and commodity currencies. Many countries around the world, such as India and Brazil, have set new records for infections and deaths, ”analysts from the Commonwealth Bank of Australia said in a research note.
Analysts said they were looking for European Central Bank officers on Thursday, followed by revenues from the Federal Reserve and Big Tech on Wall Street next week.
NETFLIX SLUMP
S&P 500 e-mini stock futures were slightly firmer, hinting at a potentially modest recovery from Tuesday’s sell-off on Wall Street.
The Dow Jones Industrial Average fell 0.75%, the S&P 500 lost 0.68% and the Nasdaq Composite fell 0.92% Tuesday as investors sold airlines and travel-related stocks for fear of a slowed recovery in global tourism.
Some tech stocks and companies benefiting from stay-at-home demand could come under further pressure Wednesday after Netflix Inc reported disappointing subscriber growth for its movie streaming service, which dropped its shares 11% in out-of-hours trading. .
MSCI’s widest index of Asia-Pacific stocks outside Japan fell 1.1%. Australian stocks fell 0.3%, but stocks in China offset early losses and rose 0.3% on positive income from healthcare and banking.
The dollar index against a basket of six major currencies was 0.2% higher at 91,358.
Investors will be keeping a close eye on an auction of 20-year US Treasuries later on Wednesday, which will be an important gauge of global demand for fixed income.
Ahead of the auction results, the 10-year benchmark Treasury yield traded at 1.5767%, close to its six-week low.
In a sign of increasing risk aversion, spot gold traded at $ 1,781.40 an ounce, close to its seven-week high reached Monday. [GOL/]
Reporting by Stanley White; Editing by Lincoln Feast, Kim Coghill and Gareth Jones