Global stock markets meandered on Thursday as a continued rise in coronavirus cases dashed hopes of a swift recovery from the pandemic-induced economic slump and drove demand for safe-haven currencies such as the dollar and Japanese yen.
Around 400 workers tested positive for the virus at a slaughterhouse in northern Germany, fueling contagion concerns, yet gold prices eased a bit after a Chinese medical expert said Beijing has brought a recent outbreak under control.
Stocks on Wall Street seesawed either side of breakeven as investors struggled to interpret the impact of economic data without any guidance from corporations on their earnings.
Cleveland Federal Reserve Bank President Loretta Mester said it could take a year or two for the U.S. economy to return to pre-pandemic levels, with the gross domestic product declining by 6% in 2020 and the unemployment rate still around 9% by year's end.
Justin Onuekwusi, portfolio manager at Legal & General Investment Management, said the flare-ups in Germany and China and rising infection rates in some U.S. states were cause for concern.
"It's going to be a theme where we see economies having to do mini-lockdowns and isolation measures in order to contain the virus. The question is how much it affects markets," he said.
U.S. data suggested a declining pace of Americans filing for unemployment benefits has stalled, reminding investors the economy faces a long and difficult recovery from the COVID-19 recession. At least 29 million Americans are collecting unemployment checks, a sign of the tough road ahead.
"The restarting of the economy is going to be slow, it's going to be uneven and initial jobless claims today reflect that," said Kristina Hooper, chief global market strategist at Invesco.
Rising infection rates raises the question of what happens if that doesn't slow, Hooper said, noting that many states will not reimpose lockdowns because they want to allow economic activity to continue.
"You could have a situation where infections continue to rise, but it doesn't necessarily have the impact on economic activity that it did in March and April," Hooper said.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.14%, while the pan-European STOXX 600 index <.STOXX> closed down 0.71%, hurt by a plunge in Wirecard <WDIG.DE> shares over missing cash balances.
Emerging market stocks lost 0.08%. The Dow industrials fell but the Nasdaq eked out a fifth straight day of gains and the S&P 500 closed higher after spending much of the session lower.
The Dow Jones Industrial Average <.DJI> fell 39.51 points, or 0.15%, to 26,080.1, the S&P 500 <.SPX> gained 1.85 points, or 0.06%, to 3,115.34 and the Nasdaq Composite <.IXIC> added 32.52 points, or 0.33%, to 9,943.05.
(GRAPHIC: Second wave in the United States - https://fingfx.thomsonreuters.com/gfx/mkt/qzjpqjxjrvx/20618C.png)
CHINESE BRIGHT SPOT
China's blue-chip CSI300 shares <.CSI300> were a bright spot, adding 0.7%, helped by reassurances from its central bank governor that the world's second-largest economy would maintain ample financial liquidity this year as the economy recovers.
Euro zone bonds hardly budged, even as the European Central Bank announced record demand for its new round of cheap loans, with the strong take-up expected to support the bond market.
In currency markets, the yen touched a four-day high of 106.65 and was last neutral at 107 <JPY=>. The dollar index <=USD> rose 0.409%, with the euro <EUR=> down 0.36% to $1.1203.
U.S. Treasury yields fell and crude oil rose as worries about fuel demand in light of rising coronavirus cases were offset by U.S. government data showing lower inventories of gasoline and distillates, indicating higher demand.
Benchmark 10-year U.S. Treasury notes <US10YT=RR> fell 3.1 basis points to yield 0.7019%.
U.S. crude <CLc1> settled up 88 cents at $38.84 a barrel, while Brent <LCOc1> rose 80 cents to settle at $41.51.
U.S. gold futures <GCcv1> settled down 0.3% at $1,731.10 an ounce.
(Reporting by Herbert Lash; Editing by Dan Grebler, Leslie Adler and Jonathan Oatis)
