GLOBAL-MARKETS-Stocks pause after recent run

GLOBAL-MARKETS-Stocks pause after recent run

Reuters  | Jun 08, 2020 16:50

GLOBAL-MARKETS-Stocks pause after recent run

* European stocks under pressure after last week's gains
* MSCI world stocks index 7% down from record highs
* Asian stock markets rise for eight straight sessions
* Oil prices rise after output cuts extended
* Graphic: World FX rates in 2020

(Recasts top half, updates prices, adds graphic)
By Thyagaraju Adinarayan
LONDON, June 8 (Reuters) - World shares paused on Monday as
investors turned cautious after a 42% surge since March, as
economies continued to struggle with the effects of the
coronavirus pandemic.
Europe's blue-chip stock index .STOXX50 opened 0.5% lower
after its best weekly gain in more than eight years. The index
was dragged down by healthcare and tech stocks, which were
resilient throughout the coronavirus crisis.
U.S. S&P 500 futures ESc1 inched 0.1% lower, giving up
most of the gains made earlier in the day. Asia shares rose in a
catch-up rally following Friday's U.S. jobs data, which showed a
surprising recovery, raising hopes of a quicker global economic
revival from the coronavirus pandemic.
Gains in Asia were capped as a Chinese trade data published
on Sunday showed exports contracted in May as global lockdowns
continued to weaken demand. A bigger-than-expected fall in
imports pointed to mounting pressure on manufacturers as world
growth stalled. "European stocks are probably under pressure following weak
China data overnight. However, we do not think this marks the
end of the rally," said Marija Vertimane, senior strategist at
State Street Global Markets.
"We are beginning to see evidence of economic data improving
gradually and thankfully no major secondary spikes in
infections. We expect that to encourage investors to come back
to the market."
The MSCI all-country world stocks index .MIWD00000PUS ,
which covers 49 markets around the world, is now 7% away from a
record high. Wall Street's fear gauge .VIX remained pinned
below 30 points in June on encouraging economic data and central
bank stimulus.
The U.S. Labor Department's closely watched employment
report showed an unexpected drop in the jobless rate to 13.3%
last month from 14.7% in April, a post-World War Two high.
The data raised hopes of a quick economic recovery as
governments worldwide ease social curbs aimed at stemming the
The jobs data also pushed up U.S. bond yields, with the
10-year Treasuries yield rising as high as 0.959% US10YT=RR on
Friday, a level not seen since mid-March. It last stood at
The gains in U.S. bond yields over the past couple of days
put more focus on the U.S. Federal Reserve, which will hold a
two-day policy meeting ending on Wednesday.
Fed Chair Jerome Powell has said the U.S. economy could feel
the weight of the economic shutdown for more than a year.
Hopes of a quick recovery in the U.S. could be quashed by
mounting wave of protests demanding police reform after the
killing of a black man in Minneapolis.
"From an economic standpoint, protests certainly add to the
damage done by Covid-19, which could mean that the U.S. might
delay opening up its economy even more," said George Lagarias,
chief economist at Mazars.
In Europe, yields on top-rated German government bonds
dipped but remained near the more than two-month highs hit last
week after the European Central Bank expanded its emergency
stimulus scheme. Brent crude LCOc1 climbed 1.5% to $42.93 per barrel. U.S.
West Texas Intermediate crude CLc1 rose 1.3% to $40.08 a
barrel. O/R
The broad improvement in sentiment weighed on the safe-haven
Japanese yen, which stood at 109.5 to the dollar JPY= , near
Friday's 10-week low of 109.85.
The euro changed hands at $1.1303 EUR= , after touching a
three-month high of $1.1384 on Friday.

World stock valuations
Fed Balance Sheet versus VIX

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