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Shares burdened by viral concern, lack of stimulus

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© Reuters. Individuals wearing protective masks following the coronavirus disease (COVID-19) outbreak appear on a screen showing stock prices outside of a broker in Tokyo

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By Tom Arnold and Tom Westbrook

LONDON / SINGAPORE (Reuters) – Equities struggled on Friday as concerns about a resurgence in coronavirus cases and ongoing disappointment that central banks merely reiterated their financial support this week without promising fresh stimulus made investors suspicious .

Oil rose after OPEC reported crackdown on members who did not cut production and the dollar returned to the bottom of its most recent range after its brief trip after the Fed meeting on Wednesday.

The Fed promised to keep rates low for a long time, but gave no new indications of further financial support. The Bank of England and the Bank of Japan sounded more open to further incentives on Thursday, but they also took no action.

Tensions in Asia also increased after Taiwan upset fighter planes as several Chinese planes approached the island during Chinese military exercises.

European equity markets were 0.2% lower in troubled trading, with travel and leisure stocks falling.

Sentiment remained cautious as France confirmed 10,593 new coronavirus infections on Thursday, the highest number of days since the pandemic began, and the UK saw a surge in some cases.

Spain's Bankia was down 2% after Caixabank found € 4.3 billion ($ 5.10 billion) in a deal that will create Spain's largest domestic bank.

Euronext rose 4% after the London Stock Exchange announced it would enter into exclusive talks to sell Borsa Italia to the French exchange operator.

MSCI's broadest index for stocks in the Asia-Pacific region outside of Japan rose 0.5%. China stocks saw their strongest gains in three weeks. The CSI300 index rose 2.2%, led by financial companies.

The US MSCI World Equity Index rose 0.1% and posted its first weekly gain in three weeks.

S&P 500 futures signal a containment of Thursday's losses on Wall Street

However, analysts warned of possible volatility associated with a quarterly expiration of US equity options, stock index futures, and index option contracts known as "quadruple witchcraft".

"There is often a lot of volume flowing through the markets on days like this, which can increase volatility," said James Athey, investment director at Aberdeen Standard Investments.

"Lately the markets have been listless and there has been no driving force in either direction. By and large, politics will become an increasingly important focus through the end of the year as the US elections and Brexit negotiations don't seem to be doing this. " Progress and European elections with Italian regional elections next week. "

YUAN, YEN STAND OUT

The US consumer confidence data is due later on Friday. Thursday's numbers showed the US labor market recovery is stalling.

This meant that the dollar (= USD) extended losses overnight and fell 0.1%, which was set for a weekly loss.

The Japanese yen shook off a dovish-sounding Bank of Japan and appreciated against the dollar. It stayed close to Thursday's seven-week high at 104,610. (/ FRX)

The New Zealand dollar was the biggest engine, rising overnight, hitting its highest level in 1 1/2 years in early London trade after the Treasury Secretary gave the economy a positive assessment in television interviews.

The yuan rose 1% for the week and was on its way to its longest weekly profit streak since early 2018, when bonds flowed into China's capital-controlled economy and boosted the currency. (CNY /)

"We are not seeing any signals of the daily pegging of the yuan from the People's Bank of China to suggest that authorities are concerned about the latest trends," Nomura analysts said in a note. "We're staying tight on both cash and options."

Eurozone government bond yields rose, suggesting some risk appetite, but ongoing concerns about the economic recovery and a longer-term interest rate scenario supported prices.

German 10-year safe haven bond yields rose 1 basis point in early trading to -0.479%. Italian 10-year yields rose 1.3 basis points to 0.969%.

In the commodity markets, oil gained for the fourth year in a row when a new storm built up in the Gulf of Mexico.

rose 0.4% to $ 43.49 a barrel, while US oil futures rose 0.5% to $ 41.16 a barrel.

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