Global shares dip on US stimulus delay and weak Chinese data
China data misses expectations as travel stocks sink as Britain adds more European countries to its quarantine list
London/Tokyo — Global shares dipped on Friday after lacklustre Chinese economic data and worries about a delay in US fiscal stimulus discouraged some investors from taking on risk.
European shares were also dragged lower by a hit to travel stocks after Britain added more European countries to its quarantine list. The pan-European Stoxx 600 was down 0.7%, although on track to gain for a second straight week.
MSCI’s world index was 0.2% lower, drifting further from all-time highs touched in February. The index has still rallied close to 50% from March’s trough in the wake of the Covid-19 pandemic.
“The rally was over-extended and most of the good news is already priced in,” said François Savary, chief investment officer at Swiss wealth manager Prime Partners.
“There are no more-positive-than-expected earnings and we’re back to the macro-background and checking the data regularly to see if the recovery is sustainable. Markets are pricing in a lot of good news and we will be entering a period of volatility with the US elections coming up.”
Preliminary European employment and GDP numbers due at 9am GMT and US retail sales figures at 12.30pm GMT will be watched for signs of divergence between the US and European recoveries.
Data showing a slower-than-expected rise in Chinese industrial production and a surprise fall in retail sales put Asian shares on the back foot.
MSCI’s broadest index of Asia-Pacific shares excluding Japan fell 0.1%, although shares in Japan rose 0.2%. Chinese shares rose 1.5% in choppy trade, with the data suggesting domestic demand is still struggling with the coronavirus pandemic.
E-mini futures for the S&P 500 were flat.
The benchmark German 10-year bund yield fell to -0.42% after rising for three sessions and having touched a six-week peak in early trade. Yields on US treasuries remained elevated after an auction of 30-year bonds on Thursday met weak demand.
Further equity gains are likely to be limited as investors await progress in negotiations over US economic stimulus, which is necessary to prevent a nascent recovery in the world’s largest economy from sliding into reverse.
Some traders stuck to the sidelines before a meeting between US and Chinese officials about phase one of their trade deal on Saturday.
Spot gold fell 0.35 to $1,947.43 as high US treasury yields prompted investors to reassess their positions. Bullion has declined more than 4% so far this week, its biggest weekly percentage fall since early March.
Data on Thursday showed the number of Americans seeking unemployment benefits dropped below 1-million for the first time since the start of the pandemic, but was not enough to change economists’ views that the jobs market is faltering.
US treasury yields also supported the dollar, which held steady at ¥106.90 and $1.1812 against the euro. The dollar index was headed for an eighth consecutive week of losses, its longest weekly losing streak since June 2010.
Oil edged further below $45 a barrel amid worries about supply recovery and rising supply. Brent crude fell or 0.7% to $44.67, reversing this week’s gains. US West Texas Intermediate slipped 0.6% to $41.99.
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