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GLOBAL MARKETS-Shares retreat on coronavirus resurgence, fading U.S. stimulus hopes

Published 2020-10-15, 02:00 a/m
Updated 2020-10-15, 02:06 a/m
© Reuters.

* Ex-Japan Asian shares down 0.6%, Nikkei slips 0.5%

* U.S. tech shares hesitate to rise above Sept peak

* Rising fear of new lockdowns sap risk appetite

* Mnuchin dashes hope of stimulus before election

* European shares seen falling 0.7%

By Hideyuki Sano

TOKYO, Oct 15 (Reuters) - Global shares slipped on Thursday as investors locked in recent gains amid rising concerns about resurgent COVID-19 infections and after the U.S. Treasury Secretary dashed any remaining hopes of a stimulus package before the Nov. 3 election.

European shares were set to open lower, with the pan-European Euro Stoxx50 futures STXEc1 falling 0.7%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS lost 0.6% while Japan's Nikkei .N225 dropped 0.5%.

U.S. S&P 500 futures ESc1 sagged 0.25% in Asia after major U.S. stock indexes ended the previous session lower, with the S&P 500 .SPX closing down 0.7% and the Nasdaq Composite Index .IXIC shedding 0.8%.

The New York FANG Plus index .NYFANG of the top U.S. tech firms has struggled to rise about its record peak hit in September as investors lacked conviction to test new highs.

"My gut feeling is that many investors are aware that those growth shares have been bought excessively, and that the U.S. election could change the driver of the market," said Kenji Hashizume, senior fund manager at Sumitomo Mitsui DS Asset Management in Hong Kong.

Concerns that a resurgence in the COVID-19 pandemic could lead governments to again shut down economies spurred profit-taking.

With COVID-19 cases surging, some European nations are closing schools, cancelling surgery and enlisting student medics as overwhelmed authorities braced for a repeat of the nightmare scenario seen earlier this year. helped push the German 10-year Bund yield to as low as minus 0.586% DE10YT=RR , a rate last seen in May.

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Downbeat comments from U.S. Treasury Secretary Steven Mnuchin that a stimulus deal was unlikely be made before the Nov. 3 vote also provided another excuse for profit-taking. many investors expect large stimulus after the election, which Democratic presidential candidate Joe Biden is increasingly expected to win.

Although Biden has been seen as more likely to raise taxes on corporate profits and capital gains, investors are also pointing to other potential benefits of a Biden presidency, such as less global trade uncertainty.

"It smacks of opportunism when markets were saying just a few months ago stocks would crash if Trump would lose and now they say a Biden victory would be good for stocks," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley (NYSE:MS) Securities. "What this suggests is that markets are flush with cash after massive monetary easings by global central banks."

In currencies, sterling was well-bid at $1.3017 GBP=D4 , having climbed 0.6% on Wednesday on hopes of progress in talks between Britain and the European Union. some of the enthusiasm was lost after British Prime Minister Boris Johnson told the head of the European Commission, Ursula von der Leyen, that he was disappointed there had not been more progress in the talks. Australian dollar shed 0.5% to $0.7128 AUD=D4 after the country's central bank stoked speculation of a near-term cut in interest rates and more longer-dated government debt purchases. need for further Australian stimulus was underlined by data showing 29,500 jobs were lost in October while the unemployment rate rose a tick to 6.9%. euro moved little at $1.1725 EUR= while the dollar changed hands at 105.20 yen JPY= .

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The Thai baht THB= has so far weathered the impact of mounting protests against the government as the country has been prone for years to sometimes violent political crashes. prices rose slightly after U.S. crude stockpiles fell last week, adding to 2% gains overnight, as OPEC and its allies were seen fully complying in September with their pact to curb output.

U.S. West Texas Intermediate (WTI) crude CLc1 futures picked up 0.1% to $41.07 a barrel while Brent crude LCOc1 futures rose 0.1% to $43.34 a barrel.

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