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Shares slip as coronavirus worries overshadow positive China data

Published 2020-10-12, 07:58 p/m
© Reuters. People wearing protective face masks, following an outbreak of the coronavirus, are reflected on a screen showing Nikkei index, outside a brokerage in Tokyo

By Tom Wilson

LONDON (Reuters) - European shares fell on Tuesday as worries over the coronavirus pandemic overshadowed Chinese trade data that pointed to a buoyant recovery, while the U.S. dollar edged away from a three-week low.

The broader Euro STOXX 600 (STOXX) fell 0.4% in early trading, with bourses in Frankfurt (GDAXI), London (FTSE) and Paris (FCHI) all down by a similar margin.

Keeping markets on edge, traders said, was news that Johnson & Johnson (N:JNJ) was pausing its COVID-19 vaccine candidate clinical trials because of an unexplained illness in a study participant.

Investors see the quick introduction of a coronavirus vaccine as key to helping economies bounce back. J&J's move comes after AstraZeneca (L:AZN) paused late-stage trials of its experimental vaccine in September, also due to a participant's unexplained illness.

The travel and leisure (SXTP) and autos (SXAP) sectors suffered, losing 1.7% and 0.6% respectively.

Wall Street was also set to lose ground, with S&P 500 futures (ESc1) last down 0.5%.

The pessimistic mood jarred with earlier resilience on Asian markets, which recovered losses after Chinese data showed exports rising 9.9% in September and imports swinging to a 13.2% jump versus a 2.1% drop in August.

The data, which suggests Chinese exporters are recovering briskly from the pandemic's hit to overseas orders, helped MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) gain 0.1% after earlier falling into negative territory.

Chinese blue chip shares (CSI300) also gained 0.3% after dipping early in the day. Some investors, though, raised questions about how strong consumer demand would prove to be.

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"The question is not necessarily how China's trade is doing per se, but how well will consumers spend on Christmas to give some sense of normalcy amid a period of great stress," said Nordea Investments' Sebastien Galy in a note.

The MSCI world equity index (MIWD00000PUS), which tracks shares in nearly 50 countries, fell 0.1%.

On Monday, the Nasdaq Composite (IXIC) jumped 2.6%, its biggest one-day rally in a month.

Wall Street gains were driven by Apple Inc (O:AAPL), which surged 6.4% ahead of the expected debut of its latest iPhone. Amazon (O:AMZN), another of the Big Tech winners from the pandemic, rallied 4.8% ahead of a major marketing event.

BIDEN BOUNCE?

Investors are increasingly expectant of a victory for Democratic candidate Joe Biden in the U.S. Presidential election next month. That would likely herald a big stimulus package to help the coronavirus-battered U.S. economy.

"Biden effectively leading in the polls is removing some element of uncertainty," said Jeremy Gatto, an investment manager at Unigestion in Geneva. "In investors' minds, it's not a question of it we get a stimulus, but when."

A Biden win is seen by some as negative for the U.S. dollar, give the candidate's pledge of higher corporate tax rates.

Still, the greenback rose 0.2% against a basket of other major currencies to 93.214 (=USD), trying to extend a rebound from Friday's near-three-week low of 92.997 as market players favoured the dollar over riskier currencies.

The Chinese yuan fell 0.1% to 6.7466 per dollar

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Elsewhere, the Australian dollar dropped as much as 0.6% to $0.7165

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