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Markets

World stocks ease further from highs, oil dips on COVID-19 count

  • MSCI World down for third straight day.
  • COVID-19 infection rates suge in United States, Japan.
  • Oil down, dollar up slightly; Fed action eyed.
19 Nov 2020

LONDON: World stocks eased for the third day in a row and oil fell on Thursday, tracking weakness in Asia and on Wall Street as widening COVID-19 restrictions weighed on market sentiment.

Positive news about potential vaccines had helped push the MSCI World Index to a record high earlier in the week, only for investors to pull back as a host of countries announced record infection rates and tougher lockdowns.

At 1053 GMT, the broad gauge of global equities was trading down 0.4% while Europe's major indexes were down 0.8%-1%. Oil prices also fell 1-1.6% as virus restrictions crimped demand expectations.

The weaker sentiment was triggered by a late US sell-off that saw the S&P 500 close down 1.1% following news that COVID-19 deaths in the world's biggest economy had passed 250,000, underpinning a host of lockdowns.

Similarly sombre news in Japan, which saw a record number of cases and a rise in Tokyo's pandemic alert level, sent the Nikkei down 0.4%. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%.

"The markets probably overshot the vaccine news and are probably just retreating slightly now because case numbers are going up," said Gavin Rochussen, chief executive of UK-based asset manager Polar Capital.

"The vaccine will take time to be delivered, to be administered and so on, and I think what's happening is markets are realising that ... it's not just the silver bullet, it will take time."

The positive vaccine news had continued yesterday after Pfizer said its COVID-19 vaccine was 95% effective and it would apply for emergency US authorization within days, following a similar recent report from Moderna.

Wall Street futures suggested more to come, down 0.3%, with all eyes on the US Federal Reserve for signs it could step in with fresh monetary stimulus -- something two officials nodded to on Wednesday..

Investors will also await US jobs data at 1330 GMT.

Against a basket of currencies the dollar was last at 92.621 , near its weekly opening high. Euro/dollar shed 0.2% to last trade at $1.1827.

"The vaccines news are a positive medium-term impulse for the global economic outlook and investors are trying to weigh that against the prospect of an imminent stalling of the European and US recovery amid the prospect of extensions of current lockdown measures," said Rodrigo Catril, a senior FX strategist at NAB.

Sterling weakened, down 0.4% against the dollar and 0.2% per euro, on a report Europe's leaders would demand the European Commission publish Brexit no-deal plans as the deadline for trade talks go down to the wire.

Despite the equity market caution, gold traders continued to take a longer-term view, betting the COVID-19 vaccines would translate into a quicker economic recovery. That sent the precious metal to a one-week low.

Bitcoin, sometimes regarded as a safe haven or at least a hedge against inflation, also pulled back and last stood at $17,599.