Reuters | Sep 09, 2020 04:54
By Tom Wilson
LONDON (Reuters) - European shares on Wednesday shrugged off heavy losses for U.S. tech stocks and a major drugmaker delaying testing of a coronavirus vaccine, as investors kept faith in an economic recovery from the coronavirus pandemic.
The broad Euro STOXX 600 (STOXX) gained 0.7% in early trading, steadying after hefty declines a day earlier on a rout of tech shares, a key drivers of the stunning recovery for global stocks from coronavirus-induced lows.
AstraZeneca (L:AZN) said it has paused global trials of its experimental COVID-19 vaccine due to an unexplained illness in a study participant.
The news earlier unnerved investors hoping the quick introduction of a vaccine would help accelerate the recovery for economies ravaged by the pandemic.
Bond yields fell and the Japanese yen
The MSCI world equity index (MIWD00000PUS), which tracks shares in nearly 50 countries, was flat.
With Big Tech the main winners in the global recovery from the coronavirus, benefiting from stay-at-home spenders, investors were mostly sanguine about the sector's prospects, even after the bruising sell-off.
The Nasdaq has lost $1.5 trillion since hitting a Sept. 2 peak.
"This has been a correction that was probably not that surprising, given the move in August in the tech sector," said Salman Baig, an investment manager at Unigestion, adding that the outlook for Big Tech was positive.
"It's exactly those companies that are new economy - they are benefiting because of their model, the industry, the virus."
Those attributes have sparked heavy bets from the likes of SoftBank, which has traded heavily in tech stocks call options.
The bets have unnerved investors worried about its exposure to the sector. SoftBank Group (T:9984) shares lost 3% in Tokyo, extending this week's slump that has wiped $15 billion from its market capitalisation.
Despite renewed appetite for stocks, safe-haven German government bond yields (DE10IT10=RR) fell to their lowest in two-weeks. The fall in tech shares also boosted demand for U.S. Treasuries, even though heavy supply this week is expected to weigh on the bonds.
The remarkable rally in global shares from their March lows has been driven in part by expectations that a COVID-19 vaccine would be found, helping to accelerate the economic recovery from the coronavirus pandemic.
Yet AstraZeneca's move dims prospects for an early rollout of its vaccine, described by the World Health Organization as probably the world's leading candidate and the most advanced in terms of development.
Deutsche Bank (DE:DBKGn) strategists called the suspension of the trials "a blow".
AstraZeneca shares recovered ground after falling heavily in after-hours U.S. trading, and were last down 0.6%.
Britain will set out new details of its blueprint for life outside the European Union, publishing legislation a minister acknowledged would break international law and which could sour trade talks.
Sterling dipped 0.3% to $1.2945, its lowest since the end of July, and also fell the same amount against the euro (EURGBP=D3) to 90.70 pence, its lowest for six weeks.
(For Reuters Live Markets blog on European and UK stock markets, please click on: [LIVE/]; Reporting by Tom Wilson)
Written By: Reuters
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