LONDON – Global equities languished close to two-week lows on Thursday while the dollar traded near a four-month high against the euro, as investors worried that Europe’s COVID-19 response was falling behind that in the United States.
European markets were under pressure, with the STOXX index of 600 European shares down 0.8 percent and Britain’s FTSE index down 1.1 percent. The mood was not helped by data showing the biggest rise since Jan 9 in new confirmed coronavirus cases in Germany. The number of people with COVID-19 in French intensive care meanwhile set a high for 2021.
Extended lockdowns and worries about the pace of vaccinations across Europe hobbled the euro, which was down 0.1 percent against the dollar, at US$1.1807.
The dollar index had hit its highest since November 2020 overnight, at 92.697, breaking its 200-day moving average.
“The dollar is absolutely critical,” said James Athey, investment director at Aberdeen Standard Investments.
“While the ‘reflation trade’ has been largely driven by US fiscal stimulus and thus growth and inflation expectations, it has also been driven by rising input prices coming from higher commodity prices.
“If the dollar starts rallying that becomes a problem. It means commodity weakness and emerging-market weakness and it starts to provide a disinflationary countervailing narrative.”
MSCI’s gauge of world stocks was 0.2 percent lower, down for a second day and at its lowest level in more than two weeks.
Its broadest index of Asia-Pacific shares outside Japan fell 0.2 percent, bringing it closer to wiping out all the gains it has posted so far this year.
Weighing on sentiment was a selloff in Chinese technology shares amid concern they will be delisted from US exchanges and worries about a semiconductor shortage.
China’s blue-chip CSI300 index edged 0.05 percent lower to its lowest close since Dec 11.
US stock futures pointed to a steadier start on Wall Street after Wednesday’s tumble, with E-minis 0.4 percent firmer.