World Shares Mixed As Investors Await Comment From Fed
World shares were mixed Wednesday as reports of dismal company earnings add to pessimism over the widespread economic fallout from the coronavirus pandemic.
Germany’s DAX lost 0.2% to 12,816.61 while in France, the CAC 40 jumped 0.8% to 4,967.05. Britain’s FTSE 100 added 0.2% to 6,141.92. U.S. futures were marginally higher, with the contract for the S&P 500 up 0.2% and that for the Dow industrials up 0.1%.
The pandemic is the primary concern, as secondary outbreaks raise the likelihood of further lockdowns to curb a resurgence in countries that had thought to have the virus under control, said Jeffrey Halley of Oanda.
“An escalation followed by the renewal of severe movement restrictions could see the much-feared secondary wave double-dip recession occur. That has not been priced into markets remotely unless you are talking about precious metals. But as yet, we are not at the double-dip stage,” Halley said in a commentary.
In Japan, authorities reported 981 newly confirmed cases as of Tuesday and more than 1,000 on Wednesday. The chief government spokesman Yoshihide Suga said some areas may be running out of room at special facilities to house and monitor infected people and that a surge in “clusters” of cases was a concern.
Tokyo’s Nikkei 225 index lost 1.2% to 22,397.11 after Fitch Ratings downgraded its outlook for Japan to “negative” from “stable.”
“The coronavirus pandemic has caused a sharp economic contraction in Japan, despite the country’s early success in containing the virus,” Fitch said in announcing its decision.
Elsewhere in Asia, South Korea’s Kospi added 0.3% to 2,263.16. Australia’s S&P/ASX 200 slipped 0.2% to 6,006.40. Hong Kong’s Hang Seng climbed 0.5% to 24,883.14, while the Shanghai Composite index jumped 2.1% to 3,294.55 as buying kicked in after recent losses.
India’s Sensex dropped 1.3% and also fell in Taiwan.
The price of gold rose $10.10 to $1,954.70 per ounce.
The Federal Reserve began a two-day meeting on interest rates Tuesday, with an announcement scheduled for Wednesday. Investors largely expect the central bank to keep short-term rates at their record, near-zero low, but they’re also looking to hear what it says about how long they may stay there.
The Fed helped launch the stock market’s recovery in late March by slashing interest rates and promising to buy Treasurys, corporate bonds and other debt, pumping extra cash into the economy.
On Tuesday, the Fed said it will extend the lives of seven of the lending programs by three months through the end of the year in an acknowledgment of the severity of the recession.
This week marks the heart of earnings reporting season for the S&P 500, and several big companies gave results that fell short of analysts’ already lowered expectations as the pandemic stole customers away and increased some costs.
Rising coronavirus counts in many states are bringing a new wave of shutdowns and investors are hopeful that Democrats and Republicans can reach a deal on more aid for the 16 million or so Americans who are getting unemployment benefits, even though the two sides still seem to be far apart.
Benchmark U.S. crude oil added 39 cents to $41.42 a barrel in electronic trading on the New York Mercantile Exchange. It lost 56 cents to $41.04 per barrel on Tuesday. Brent crude, the international standard, gained 45 cents to $44.06 per barrel.
The U.S. dollar slipped to 104.91 Japanese yen from 105.07 yen on Tuesday. The euro strengthened to $1.1752 from $1.1718.