Global stocks rally loses momentum ahead of earnings results
European stocks drifted lower on Tuesday, snapping a three-session winning streak, as a worsening of the pandemic weighed on sentiment.
Waning jitters over a contested US presidential election result helped global bourses kick off the week on a strong note, with stocks on Wall Street rallying strongly on Monday. But equities pulled back on Tuesday following a setback in a coronavirus medical trial and signs that Europe’s recovery was slowing.
Drugmaker Johnson & Johnson said it had paused trials of its Covid-19 vaccine candidate following an unexplained illness in a participant.
The region-wide benchmark Stoxx Europe 600 was down 0.2 per cent at midday, while Frankfurt’s Xetra Dax slipped 0.4 per cent and London’s FTSE 100 fell 0.4 per cent.
US S&P 500 futures were down 0.1 per cent on Tuesday, pointing to Wall Street opening lower — though the tech-heavy Nasdaq 100 was poised to rise 1 per cent at the opening bell.
In the latest sign that Europe’s economic recovery is slowing, data released on Tuesday showed the UK’s job losses rose at a record rate in the three months to August, while the number of people claiming jobless benefits climbed to more than double its pre-coronavirus level.
The grim employment news comes a day after the UK government announced a tiered coronavirus alert system and accompanying restrictions for England as infections continued to rise.
“With new Covid-19 restrictions across the UK, there can be little doubt that challenges facing the jobs market are mounting,” said James Smith, developed markets economist at ING. That is “likely to put renewed pressure on the Bank of England to add stimulus at its November meeting”, he added.
Expectations for Germany’s economy also deteriorated significantly in October, according to the latest data from the Zew survey, a key gauge of sentiment in Europe’s largest economy. The reading came in at 56.1, its lowest point since May and a sharp miss compared with the 73 anticipated by analysts polled by Reuters.
US earnings season begins on Tuesday with several big groups including JPMorgan Chase, J&J and Delta Air Lines set to report quarterly results.
Oil rebounded with Brent crude, the international benchmark, up 1.7 per cent to $42.42 after a sharp sell-off on Monday.
In the Asia-Pacific region, shares edged higher following Monday’s rally on Wall Street. Tuesday’s gains came after data showed that Chinese imports in September beat expectations to rise by the fastest rate this year, signalling that an economic recovery was fuelling higher demand for overseas goods.
China’s currency inched lower with the onshore-traded renminbi weakening 0.1 per cent to Rmb6.7513 against the dollar. The renminbi fell as much as 0.9 per cent on Monday after the country’s central bank cut the cost of betting against the currency, which rallied late last week. Additional reporting by Thomas Hale in Hong Kong