A recent run of optimism in markets hit the brakes on Tuesday, as investors pulled back from major stock indices and turned their attention to safe-haven assets like gold
After nine days of gains in Asian equities, Europe’s big markets opened with a lurch and ended the day down 1.2%. [.EU][.N] Oil prices trended lower as concerns about a resurgence in coronavirus cases offset recent commitments by major oil producers to rein in production.
The tech-heavy Nasdaq Composite shook off early losses to climb 0.71% and set a fresh record high, while the Dow Jones Industrial Average and S&P 500 were both down at midday.
MSCI’s gauge of stocks across the globe fell 0.24%.
“We’ve gone really far in a short period of time. I would not be surprised to see the market sort of trend sideways within the next week or two,” said Tim Chubb, chief investment officer at Girard in West Chester, Pennsylvania.
Attention now turns yet again to the U.S. Federal Reserve, which kicks off a two-day meeting on Tuesday. No major policy announcements are expected when it wraps on Wednesday, but the central bank will issue its first economic projections since December. Investors will be watching as the central bank attempts to gauge the economic cost of widespread pandemic-related lockdowns to curb the spread of the new coronavirus.
The euro climbed 0.4% , while the safe-haven yen and Swiss franc gained against the dollar for a second straight day this week.
LOOMING IMPACT
After a brutal March for global equity markets amid concern over both the short- and longer-term damage to the world economy from the coronavirus pandemic, most indices are now back to pre-COVID-19 levels.
But fears of renewed trade tensions between the United States and China and the second-round impact from higher unemployment and bankruptcies are hanging over the outlook, however.
The number of layoffs in the U.S. dropped in April, but were still high enough to be the second most on record. At the same time, hiring hit an all-time low, the Labor Department reported Tuesday.
In its latest Global Economic Prospects report on Monday, the World Bank said advanced economies are expected to shrink 7.0% in 2020, while emerging-market economies will contract 2.5%, their first slump since aggregate data became available in 1960.
Gold jumped more than 1% on Tuesday as investors adopted a more cautious stance ahead of the Fed’s policy meeting.
Like in the U.S., Latin American stock indexes were down as investors cashed in profit after the recent risk rally. Regional currencies weakened ahead of a U.S. Federal Reserve meeting.
The declines caused the broader emerging markets shares benchmark to give up gains from earlier in the day, putting it on track to potentially end its longest winning streak since April last year.
— Reuters