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GLOBAL MARKETS-Asia shares make guarded gains, virus breaks new records

Published 2020-10-25, 08:20 p/m
© Reuters.
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* Asian stock markets : https://tmsnrt.rs/2zpUAr4

* Asia markets edge up, S&P 500 stock futures slip

* Unease over record new coronavirus cases in Europe, U.S.

* Eyes this week on central bank meetings, US GDP data

*

By Wayne Cole

SYDNEY, Oct 26 (Reuters) - Global shares got off to a cautious start on Monday as surging coronavirus cases in Europe and the United states threaten the economic outlook, even as growth in China provides some support to Asia.

The United States has seen its highest ever number of new COVID-19 cases in the past two days, while France also set unwanted case records and Spain announced a state of emergency.

combined with no clear progress on a U.S. stimulus package to pull S&P 500 futures down 0.3% ESc1 .

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.1%, but remained short of its recent 31-month peak. Japan's Nikkei .N225 rose 0.2%, and South Korea's main index was up 0.4% .KS11 .

China's top leaders will chart the country's economic course for 2021-2025 at a meeting starting on Monday, seeking to balance growth and reforms amid an uncertain global outlook and deepening tensions with the United States. packed week for monetary policy sees three major central banks hold meetings. The Bank of Canada and Bank of Japan are expected to hold fire for now, while the market assumes the European Central Bank will sound cautious on inflation and growth even if they skip a further easing.

Data due out Thursday is forecast to show U.S. economic output rebounded by 31.9% in the third quarter, after the second's quarter's historic collapse, led by consumer spending.

Analysts at Westpac noted that such a bounce would still leave GDP around 4% lower than at the end of last year, with business investment still lagging badly.

"To fully recover the activity lost, additional meaningful fiscal stimulus is a must," they argued in a note.

The U.S. Presidential election will again loom large as markets move to price in the chance of a Democratic president and Congress, which would likely lead to more government spending and borrowing down the road.

That outlook drove U.S. 10-year Treasury yields to their highest since early June last week at 0.8720% US19YT=RR . They were trading at 0.83% on Monday.

"We have raised the probability of a Democratic sweep, already our base case, from 40% to just over 50% and have increased our expectation of Biden to win from 65% to 75%," wrote analysts at NatWest Markets in a note.

"We see steeper U.S. yield curves and a weaker USD as likely to prevail in our base case."

The dollar was flatlining on Monday having fallen broadly last week. The euro was holding at $1.1850 EUR= and just under its recent top of $1.1880, while the dollar was pinned at 104.68 yen JPY= and not far form last week's trough of 104.32.

The dollar index was stuck at 92.790 =USD after shedding almost 1% last week.

In commodity markets, gold edged down 0.1% to $1,898 an ounce XAU= . GOL/

Oil prices fell further in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe. O/R

Brent crude LCOc1 futures lost 63 cents to $41.14 a barrel, while U.S. crude CLc1 fell 61 cents to $39.24.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia stock markets

https://tmsnrt.rs/2zpUAr4 Asia-Pacific valuations

https://tmsnrt.rs/2Dr2BQA

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Shri Navaratnam)

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