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GLOBAL MARKETS-Stocks dip as U.S. stimulus underwhelms and coronavirus angst lingers

Published 22/12/2020, 17:22
© Reuters.
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* Euro STOXX 600 rebounds, U.S. stocks lag
* Sterling falls on new COVID-19 variant, stalled trade
talks
* Dollar index rises but faces 3rd straight quarterly loss
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By April Joyner
NEW YORK, Dec 22 (Reuters) - Lingering concerns over a new
variant of COVID-19 in the United Kingdom weighed on a gauge of
global equities on Tuesday and sent the euro, pound and Treasury
yields lower.
The benchmark U.S. S&P 500 .SPX stock index dipped in
choppy trade, despite the U.S. Congress's passage of an $892
billion coronavirus aid package.
Some investors said that the fiscal stimulus had already
been priced into U.S. equities, while other observers considered
the package underwhelming. "There were probably hopes that there would be something
bigger," said Michael Purves, chief executive of Tallbacken
Capital Advisors. "There's a good chance the economy will need
another package."
The sluggishness in U.S. stocks offset a rebound in European
stocks, which had been pummeled on Monday as fresh coronavirus
concerns mounted. The pan-European STOXX index .STOXX , up
1.17%, was on pace to log its biggest one-day percentage gain in
more than five weeks.
As a result of the U.S. declines, MSCI's index of global
stocks .MIWD00000PUS slipped. It was last down 0.09%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
96.58 points, or 0.32%, to 30,119.87, the S&P 500 .SPX lost
2.43 points, or 0.07%, to 3,692.49 and the Nasdaq Composite
.IXIC added 39.71 points, or 0.31%, to 12,782.22.
U.S. Treasury yields also fell as investors weighed the
likelihood of increased lockdowns in response to the new
COVID-19 variant. Benchmark 10-year Treasury notes US10YT=RR
last rose 3/32 in price to yield 0.9313%, from 0.941% late on
Monday. Among currencies, the euro EUR= and the pound GBP=D3
dropped, in part on expectations that such restrictions could
weaken Europe's economic outlook. On Monday, countries across
the world shut their borders to Britain because of fears over
the new variant. The euro was last down 0.57% to $1.2172, while the pound was
last trading at $1.3332, down 1.03%.
The risk-off sentiment in currency markets propped up the
dollar index =USD , which rose 0.55%. Even so, the index was
still on course for a third consecutive quarterly loss.
Oil markets also reflected sustained worries over the new
coronavirus variant. Both Brent LCOc1 and U.S. crude CLc1
fell more than 1%. Still, some investors maintained hope for a strong economic
recovery in 2021, given expectations that vaccines would be
effective against the new variant of COVID-19.
The new mutation "is a bump in the road, but that road is
still leading to a much stronger recovery in the second half of
next year," said Hugh Gimber, global market strategist at J.P.
Morgan Asset Management.
Stalled trade talks between the European Union and the UK
also weighed on sterling. European Commission President Ursula
von der Leyen and British Prime Minister Boris Johnson spoke on
disagreements over fisheries that are barring a new trade deal,
sources said. Analysts remained pessimistic on the pound's prospects, even
after reports of progress in Brexit trade talks. MUFG said in a note to clients it expected London and
Brussels would strike a last-minute deal, but added: "Even if a
trade deal is reached, upside potential for the pound will now
be dampened by recent negative COVID developments in the UK."


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