Sunday, June 16, 2024

Stock gains are checked as US-China tensions escalate again

by Associated Press

Stocks are drifting slightly higher in early trading Wednesday as tensions between the U.S. and China flare up again. Major indexes edged up about 0.1% in the first few minutes of trading. The U.S. ordered China to close its consulate in Houston, saying it was necessary to protect American intellectual property, and China said it would retaliate. United Airlines sank after reporting that its revenue plunged 87% as the coronavirus throttled air travel. Pfizer rose after the U.S. government signed a contract with the company to deliver the first 100 million doses of a COVID-19 vaccine it’s developing by December.

World shares were mostly lower on Wednesday on renewed worries over surging coronavirus caseloads in many countries.

U.S. futures also edged lower, though President Donald Trump’s statement that the pandemic will likely get worse before it gets better had little impact, analysts said.

Germany’s DAX slipped 0.4% to 13,113 and the CAC 40 in Paris lost 1.2% to 5,044. Britain’s FTSE 100 fell 0.9% to 6,216. U.S. futures were slightly lower, with the contract for the S&P 500 down 0.2% while the Dow industrials future edged 0.3% lower.

Hong Kong’s Hang Seng index tumbled 2%, to 25,131.50, after its health minister warned the city is at a high risk of an “outbreak in the community.” Authorities made wearing of masks on public transport and in public indoor areas as the number of confirmed cases pushed past 2,000.

Australia’s hard-hit Victoria state reported a record 484 new COVID-19 cases, and health authorities there warned that numbers could continue to rise if the sick continue to fail to isolate themselves. The Australian share benchmark, the S&P ASX/200, gave up 1.3% to 6,075.10.

Tokyo’s Nikkei 225 index lost 0.6% to 22,751.61. The Shanghai Composite index gained 0.2% to 3,328.68.

Adding to unease was a report by the U.S. Centers for Disease Control that the number of coronavirus cases in some states is much higher than has been reported. Experts have said all along that the toll from the COVID-19 pandemic is much higher than tallies of confirmed cases would indicate, due to issues with testing and data collection.

Uncertainty over prospects for more financial aid to Americans and U.S. businesses also is casting a shadow, analysts said. The Republican Party and Democrats remain divided over how much support is needed, as states grapple with rebounds in cases that have prompted some local governments to order some businesses to close to help snuff out flare ups of the virus.

“Asia markets are not expected to share in the cheer this midweek with some doubts cast on progress in delivering the next fiscal support for the U.S. economy,” Jingyi Pan of IG said in a commentary.

The Federal Reserve’s efforts to support markets and expectations that Washington eventually will deliver more financial aid to help Americans weather the economic downturn have been key in keeping markets mostly pushing higher since stocks plunged in March.

“I do not understand why the market is fretting about the U.S. stimulus plan,” said Stephen Innes of AxiCorp. Delays are to be expected given the “slow bipartisan tango that always seems to happen around these events.

But at the end of the day, no one and I mean no lawmaker, especially in an election year, want to wear the Scarlet Letter and be accused of being frugal when people are dying across the U.S. Sunbelt at record levels,” Innes said.

Among big companies reporting results this week: Microsoft and Tesla issue results on Wednesday, Intel, AT&T and Twitter report on Thursday and Verizon Communications and American Express report earnings Friday.

In the commodities markets, the price of benchmark U.S oil dropped 72 cents to $41.24 per barrel in electronic trading on the New York Mercantile Exchange. It jumped 2.8% to settle at $41.92 a barrel on Tuesday. Brent crude oil, the international standard, lost 60 cents to $43.72 per barrel.

The dollar rose to 107.01 Japanese yen from 106.79 yen late Tuesday. The euro was trading at $1.1575, up from $1.1528.

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