* Dollar having best week since start of April
* Italy's bond market borrowing costs near record low
* Yuan climbs after China govt bonds go into global WGBI
index
* End of quarter looming, Q4 to be action-packed
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
(World shares set for worst week since June, since March for
EM)
By Marc Jones
LONDON, Sept 25 (Reuters) - After the slide it was the
see-saw for markets on Friday, as stocks in large parts of the
world, the euro and "Dr Copper" all headed for their worst weeks
since the peak of the coronavirus turmoil and the dollar
cemented its best run since April.
Asia had managed to end its gloomiest week since the global
March meltdown with a modest gain, but with both France and
Britain now notching up almost record numbers of new virus cases
again and U.S. stimulus hopes fragile, the mood quickly soured.
.EU
Europe's steady start morphed into gradual and then more
meaningful selling. London's FTSE .FTSE dropped 0.5% but
Frankfurt's Dax .GDAXI and the CAC40 in Paris .FCHI slumped
1.7% to leave the pan-European STOXX 600 .STOXX with a more
than 4% weekly loss for the first time since June. .EU
There was much worse too. The region's bank index hit a new
record low .SX7E , oil and gas stocks were down more than 6%
for the week, and a sea of red on U.S. futures markets meant
September was set to be the worst month globally .MIWD00000PUS
since March's maelstrom. .EU
There had been a flicker of hope overnight after squabbling
U.S. political parties had at least talked about another
super-sized stimulus package but the rise in the
dollar =USD and demand for safe U.S. and German government
bonds remained telling. GVD/EUR
The relapse in sentiment has hit emerging market debt,
especially countries with weak credit ratings, like a wrecking
ball. Argentina's newly restructured bonds have lost around 25%,
making it the worst return to markets since Greece in 2012 while
plenty of other countries have seen 10% hammerings. EMRG/FRX
"It has been a very interesting week" said Saxo Bank's head
of FX strategy John Hardy. "We have seen the dollar come back
and what is interesting this time is that there also some
element of dollar liquidity stress in it again."
He said the talk of more U.S. stimulus ahead of the November
presidential election was likely to just be "show boating"
especially with a fierce battle over a seat on the Supreme Court
now thrown into the mix. "I just can't see anyway that the Democrats can make a deal
here with this endgame into the election... It's dirty politics
all the way now".
On Wall Street overnight, the Dow Jones Industrial Average
.DJI rose 0.2%, the S&P 500 .SPX gained 0.30% and the Nasdaq
Composite .IXIC added 0.37%.
While the economic picture in the U.S. remains clouded, the
strongest sales of single-family homes in nearly 14 years in
August helped to revive some faith in the recovery. It helped nudge the benchmark 10-year U.S. Treasury yield
US10YT=RR up to 0.6725% from a close of 0.664% on Thursday.
German Bunds ticked up to -0.5% on the day too, but were set for
a weekly drop as the growing number of coronavirus cases in
Europe fed demand for safety.
DOLLAR DAMAGE
In the currency markets, the dollar was hovering near
Thursday's two-month highs, at 105.40 JPY=EBS versus the yen
and pushing the euro EUR=EBS down to $1.1656, on course for
its worst week since the end of March/start of April. /FRX
China's yuan CNH= CNY= also made gains after the
country's government bonds gained long-awaited entry into one of
the world's most coveted bond benchmarks, the FTSE Russell WGBI.
For most emerging markets it has been a brutal week though,
with some double-digit bond market falls for the weakest
countries, the worst week since March for stocks .MSCIEF and
4%-5% drops for Mexico's peso MXNUSD=R and South Africa's rand
ZARUSD=R . EMRG/FRX
"It has been a very sharp correction this week," said Pictet
Asset Management portfolio manager, Robert Simpson. "What the
pickup in COVID cases has done is probably brought forward the
reduction of risk going into the U.S election."
The dollar's strength this week has also battered
commodities, with gold set for its worst week in more than a
month. On Friday, spot gold XAU= was steady at $1,865.16 per
ounce. GOL/
Copper, which gets its "Dr Copper" nickname from its history
as a bellwether of global economic health, was set for its worst
week since the March panic with a near 4% drop, while Brent oil
LCOc1 was down 2% on the week but 0.8% better off on the day
at $42.2 per barrel.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
MSCI World over the years https://tmsnrt.rs/2EwZNCR
EM FX feels the pain https://tmsnrt.rs/33ZOY4Y
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