Thursday, May 23, 2024

Stocks are off to a wobbly start as virus lockdowns return

by Associated Press

NEW YORK (AP) — Stocks are off to a mixed start on Wall Street following weakness in overseas markets as investors fret over new shutdowns in California to fight the spread of coronavirus infections. The S&P 500 edged up 0.1% in the first few minutes of trading Tuesday. Banks fell especially hard after several of them set aside billions to cover losses from businesses and consumers who could be unable to pay their debts due to the slumping economy. Delta Air Lines also slumped after the biggest and most profitable U.S. airline reported a big loss as the pandemic caused demand for air travel to shrivel.

Global shares fell Tuesday as skepticism set in about the recent upward momentum in global markets given rising confirmed coronavirus cases and percolating tensions between the U.S. and China.

France’s CAC 40 slipped 1.8% in early trading to 4,967.27, while Germany’s DAX was down 1.5% at 12,606.80. Britain’s FTSE 100 dipped 0.4% to 6,148.83. But U.S. shares looked set for gains, with Dow futures adding 0.4% to 26,068.0. S&P 500 futures also climbed 0.4%, to 3,158.88.

The White House’s decision to reject nearly all Chinese maritime claims in the South China Sea added to investor jitters. The world’s two largest economies have been sparring over everything from the pandemic to human rights.

Japan’s benchmark Nikkei 225 sank 0.9% to finish at 22,587.01. South Korea’s Kospi lost 0.1% to 2,183.61, while Australia’s S&P/ASX 200 dropped 0.6% to 5,941.10.

Hong Kong’s Hang Seng tumbled 1.1% to 25,477.89 as reports of locally transmitted coronavirus cases prompted authorities to tighten precautions against the pandemic. The Shanghai Composite lost 0.8% to 3,414.62.

One indicator of how bad the regional damage could get came from the advance estimate of Singapore’s gross domestic product, or GDP, for the second quarter. It showed a 12.6% year-on-year contraction, confirming Singapore’s worst recession ever. On a quarterly basis, it fell 41%.

“It is also the weakest result among our estimates for most Asian economies,” said Prakash Sakpal, a senior economist at ING, noting that the number was dismal, even though “Singapore wasn’t as badly affected by the COVID-19 pandemic as some of its Asian neighbors.”

In a bit of encouraging news, China’s trade improved in June, a sign the world’s second-largest economy, where the pandemic all started, is recovering. But its exporters face threats including tensions with Washington and weak demand amid the pandemic.

Chinese imports rose 3%, while exports edged up 0.4%. They had both contracted in May. Manufacturing is recovering in China, but consumer spending remains weak.

Global markets have been getting a painful reminder of the threat the pandemic poses to the economy, as reopenings bring on fresh spikes in coronavirus cases.

If governments continue to bring back restrictions to slow the outbreak’s resurgence, it could choke off the fragile economic improvements just as they get underway.

Benchmark U.S. crude lost 67 cents to $39.43 a barrel. It fell 1.1% to $40.10 per barrel on Monday. Brent crude, the international standard, fell 57 cents to $42.15 per barrel.

The U.S. dollar inched up to 107.29 Japanese yen from 107.27 yen on Monday. The euro fell to $1.1338 from $1.1343.

You may also like

Update Required Flash plugin