Global stocks lose momentum after a three-day rally on Wall Street
Global stocks failed to maintain their momentum Friday, indicating that a spectacular three-day rally that pushed the Dow Jones Industrial Average out of a bear market could be losing steam.
European shares fell in early trading as enthusiasm waned over the trillions of dollars in stimulus measures announced by governments and central banks to fight economic fallout from the coronavirus pandemic.
Germany’s DAX dropped 1.4%. France’s CAC 40 shed 2%, while the FTSE 100 lost 3.7% in London.
S&P 500 and Dow futures dipped 1.5%. That’s after the Dow rose 6.4%, or 1,352 points, on Thursday, emerging from the bear market that began on March 11.
Most markets in Asia Pacific rose modestly. Japan’s Nikkei 225 gained 3.9%, making it easily the region’s best performer. China’s Shanghai Composite rose 0.3%, while Hong Kong’s Hang Seng climbed 0.6% and South Korea’s Kospi increased 1.9%.
“Overall, there has been a general shift to neutrality from the perfect bear market conditions late last week, which is a good thing,” wrote Stephen Innes, chief global markets strategist at AxiCorp, in a research note.
Australia’s S&P/ASX 200 was a major regional outlier. The index closed down 5.3% in Sydney, though it eked out a 0.5% gain for the week.
India’s Sensex was flat after the Reserve Bank of India announced a slew of new measures to help the economy during the coronavirus crisis, and slashed interest rates.
The unease across global markets followed a strong performance from US stocks on Thursday, which climbed despite the worst jobless claims data on record.
Investors remained optimistic as US lawmakers put the finishing touches on a $2 trillion stimulus bill that will provide a boost to the economy. The Senate passed the bill 96-0, and the House of Representatives is expected to vote on the legislation Friday.
“The market is running with the assumption that while this tumult will be the deepest recession in modern-day financial history, it will also be the shortest,” Innes wrote.
Even with some gains this week, the coronavirus outbreak that threw financial markets out of whack this month continues to spread. Nearly a third of the world’s population is living under coronavirus-related restrictions. The United States now has the most known coronavirus cases worldwide.
— Julia Horowitz, Vedika Sud and Swati Gupta contributed to this report.
