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GLOBAL MARKETS-Stocks stumble toward best week since June

Published 07/02/2020, 10:51
Updated 07/02/2020, 10:55
© Reuters.  GLOBAL MARKETS-Stocks stumble toward best week since June
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* Coronavirus cases rise, Asian, European stocks slip

* World stocks still set for best week since June

* Major currencies steady, oil firm but has not recovered

* Payrolls expected to show U.S. labour market strength

* World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Feb 7 (Reuters) - Nagging coronavirus worries took a

swipe at world markets on Friday, though that wasn't going to

stand in the way of the best week for stocks since June and the

strongest for the dollar since August.

Europe's trading day began with stocks down and safe-haven

government bonds up, a pattern that had been set in Asia where

the death toll from the virus in China has more than doubled in

less than a week. It stood at 638 on Friday, 636 in China and two elsewhere

and it was also revealed that one of the first doctors to raise

the alarm about the virus had died from it at a hospital in

Wuhan, the outbreak's epicentre. The week up until this point, though, has been one long

rebound that has lifted MSCI's main world stocks index 3 percent

.MIWD00000PUS and almost back to the record highs it began the

year with.

Thanks to a $400 billion wipeout on Monday, Shanghai is

poised for its worst week in eight months. But the other Asian

indexes are ahead and the pan-European FTSEurofirst is heading

for its best week since late 2016.

"We are not that nervous, actually we are increasing our

risk allocation," said SEB investment management's global head

of asset allocation Hans Peterson, adding the risk of a massive

worldwide epidemic seemed to have dropped.

"We look more at this moment at the macro data in the U.S.

which is really very good... and we presume we will get

substantial support from central banks like we did in China on

Monday."

There were other areas of focus aside from the virus worries

for traders.

The euro fell to its lowest since October in early European

trading after German industrial output recorded its biggest

decline in a decade and strong U.S. employment numbers on

Thursday had primed the dollar for monthly payrolls later.

In Asian trade, the yen halted a slide that has it set for

its worst week in 18 months, leaving the currency sitting just

above a two-week low at 109.89 per dollar. FRX/

The Australian dollar, often seen as a proxy for China,

weakened 0.5% to $0.6699 AUD=D3 after the Reserve Bank of

Australia slashed growth forecasts in its quarterly economic

outlook, blaming its bushfires and the coronavirus.

The Aussie was still on track for its first weekly gain this

year, whereas Singapore dollar SGD= and Thai baht THB= have

been trampled in a rush from emerging market currencies into

majors. EMRG/FRX

OIL TOILS

Much is unknown about the coronavirus, including its

lethality and transmission routes. The World Health Organization

has said it is too early to call a peak in the outbreak.

China's aggressive response, dubbed a "people's war for

epidemic prevention" by President Xi, has seen Beijing pump

billions of dollars into the money market to try and stabilise

confidence.

Yet, owing to much greater exposure to Chinese demand and

less access to the benefits of monetary stimulus, commodity

prices have been more sensitive to conditions on the ground.

Oil and metal prices fell hard as the coronavirus outbreak

gained pace and have been slow to recover.

Brent crude LCOc1 was a touch firmer on Friday at $55.17

per barrel, but is heading for its fifth back-to-back weekly

drop having lost over 16% this year.

A rally in copper - often seen as a barometer of global

economic health because of its wide industrial use - stalled at

$5,695 per tonne though it has been its strongest week since the

start of December. MET/L

"We think that demand could come back strongly as opposed to

gradually in Q2 2020," said Commonwealth Bank commodities

analyst Vivek Dhar. "But the risk in the near term is that

(Chinese) provinces take longer to return to work in order to

contain the spread of the virus."

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