Global Markets: U.S. shares retreat on renewed pandemic fears, safe-havens rise
By Herbert Lash
NEW YORK (Reuters) - Demand for safe havens increased and global equity markets turned south on Friday after Apple Inc announced it would temporarily close eleven US stores as the number of coronavirus cases continues to grow, raising fears sparked a deadly second wave of the pandemic.
News of Apple's move to Florida, Arizona, South Carolina, and North Carolina had raised hopes of a rapid economic recovery that fueled risk appetite earlier in the day and boosted European and US stocks by about 1%.
Government bond yields fell and the dollar recovered from early losses as it made its best weekly gain in a month. Gold rose more than 1% with futures above the technical barrier of $ 1,750 an ounce, a breakout that should push the gold bar higher.
Apple's decision suggests that further restrictions will arise as coronavirus cases increase and the reopening process comes to a standstill, said Edward Moya, senior market analyst at foreign exchange brokerage firm OANDA.
The $ 1,750 mark "was a major obstacle to gold and strongly suggests that safe haven trading doesn't stop as quickly," said Moya.
European stocks saw some gains, but closed higher before the Apple News became known. Investors remained confident that a massive stimulus package of € 750 billion would soon be adopted, even though the heads of state and government of the European Union made little progress in the negotiations.
The early rise of the Nasdaq above the 10,000 mark had brought the tech-heavy index to a record high, but Apple's announcement thwarted this milestone, although the Nasdaq closed moderately higher.
MSCI's global stock index lost 0.20%, while the pan-European STOXX 600 index closed 0.56%. Emerging market equities rose 0.60%.
On Wall Street, the Dow Jones Industrial Average fell 204.38 points, or 0.78%, to 25,875.72. The S&P 500 lost 17.22 points or 0.55% to 3,098.12 and the Nasdaq Composite 3.07 points or 0.03% to 9,946.12.
Investors have been pulled in opposite directions by the improvement in economic data and new outbreaks of COVID-19 infections. California, North Carolina, and a number of U.S. cities have required or required the use of masks to contain spiral coronavirus cases.
The Chinese mainland reported 32 new coronavirus cases at the end of June 18, 25 of which were reported in Beijing, the Chinese National Health Commission said.
Oil prices fell sharply from early highs due to concerns that the ongoing pandemic spread could hamper the recovery.
Eric Rosengren, president of the US Federal Reserve from Boston, said that more fiscal and monetary support is likely to be needed for the US economy, and reiterated the comments by the European Central Bank chief, who said the EU economy was in one "dramatic decline".
Brent futures rose 68 cents to $ 42.19 a barrel, while US crude oil rose 91 cents to $ 39.75.
ECB President Christine Lagarde called on EU leaders to quickly agree on their recovery plan, diplomatic sources and officials said. The leaders are divided over their final size, but hope that an agreement will be reached in July.
The dollar index rose 0.193%, the euro fell 0.16% to $ 1.1144 and the Japanese yen 0.15% against the greenback at $ 106.83 per dollar.
The demand for government debt has hardly changed. The reference yield for 10-year Bunds was -0.415%.
The 10-year benchmark debentures rose 0.1 basis points to 0.6954% and had higher yields of 0.745% at the start of the session.
US gold futures rose 1.3% to $ 1,753 an ounce.
(Reporting by Herbert Lash; additional reporting by Elizabeth Howcroft in London; editing by Dan Grebler, Nick Zieminski and Tom Brown)
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