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GLOBAL MARKETS-World stocks sag on pandemic worries; gold gains on safety bid

Published 2020-10-14, 02:44 p/m
© Reuters.

(Recasts lead, updates prices, adds quote)

By Koh Gui Qing

NEW YORK, Oct 14 (Reuters) - Global stock markets mostly retreated on Wednesday as a record number of new coronavirus infections in parts of Europe led investors to shift away from risky assets and opt for traditional safe-havens such as gold.

Concerns that a resurgence in the COVID-19 pandemic could lead governments to shut down economies again spurred some investors to take profits in shares, particularly following the recent rally in equity markets.

Uncertainty about the pandemic was compounded by announcements on Tuesday that separate trials for a COVID-19 vaccine and a treatment for the illness have been paused, outweighing a brief boost to stocks from a positive earnings report from U.S. investment bank Goldman Sachs Group (NYSE:GS) GS.N . Street sentiment took a hit after U.S. Treasury Secretary Steven Mnuchin said a deal for fiscal stimulus would not likely be reached before the Nov. 3 elections. U.S. stock indexes gave up early gains, and by 1753 GMT, the S&P 500 .SPX had fallen 23 points, or 0.7%, to 3,488.88. The Dow Jones Industrial Average .DJI dropped 133 points, or 0.5%, to 28,554.13, while the Nasdaq Composite .IXIC shed 96 points, or 0.8%, to 11,767.26.

"The fear is we are headed back towards a lockdown, not a re-opening of economies," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

France declared a public health state of emergency on Wednesday, while Italy, Russia and Poland all reported their highest-ever daily tallies of new infections. pan-European STOXX 600 .STOXX ended flat at 370.62, while markets in Frankfurt .GDAXI and Paris .FCHI were flat and down 0.1%, respectively. London .FTSE , buffeted in part by Brexit angst, dropped 0.6%. World stocks .MIWD00000PUS slipped 0.3% but remained within sight of the all-time high struck on Sept. 3.

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Asian stocks also had a lackluster showing. MSCI's broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS had tracked Wall Street's losses overnight to end a seven-day rally.

The index was last down 0.11%, having toppled from a two-and-a-half-year high of 588.76 touched on Tuesday. Chinese shares .CSI300 closed down 0.7%.

Bolstered by uncertainty around the pandemic, the price of gold XAU= , a safe-haven asset, climbed more than 1% to a high of $1,912.51 an ounce.

Government bonds also benefited from investor caution. German bund yields DE10YT=RR , which move inversely to prices, hit their lowest level since May EUR/GVD , while the 10-year U.S. Treasury yield dipped to 0.7256%.

The U.S. dollar softened after pulling its best day in three weeks on Tuesday. The dollar index =USD , which measures the greenback against a basket of six major currencies, fell 0.2% to 93.38.

The weaker dollar, which makes oil cheaper for holders of other currencies, supported oil prices.

Concerns that fuel demand will continue to falter with rising coronavirus cases in Europe and the United States, the world's biggest oil consumer, dragged on oil prices. Brent LCOc1 and U.S. crude CLc1 pared earlier gains and were at $43.22 and $40.92 a barrel, respectively. O/R

For Reuters Live Markets blog on European and UK stock markets, please click on: LIVE/

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