Global shares mixed amid 2nd wave virus, election fears

TOKYO (AP) — Global shares were mixed on Friday as investors weighed concerns about the U.S. presidential election and an economic stimulus package, on top of flaring outbreaks of coronavirus.

France’s CAC 40 jumped 1.2% in early trading to 4,896.78, while Germany’s DAX gained 0.5% to 12,762.11. Britain’s FTSE 100 added nearly 1.0% to 5,889.79. The future for the Dow industrials was virtually unchanged at 5,889.79. S&P 500 futures inched up less than 0.1% to 3,477.62.

Looking ahead, markets are awaiting the release of data on the Chinese economy next week.

Japan’s benchmark Nikkei 225 fell 0.4% to finish at 23,410.63. Australia’s S&P/ASX 200 shed 0.5% to 6,176.80. South Korea’s Kospi declined 0.8% to 2,341.53. Hong Kong’s Hang Seng gained 0.9% to 24,386.79, while the Shanghai Composite edged 0.1% higher to 3,336.36.

Markets have turned cautious this week amid a confluence of worrisome trends amid the pandemic. Coronavirus infections are rising in Europe, prompting governments in France and Britain to impose new measures to contain the outbreak. Caseloads area also climbing in the Americas and parts of Asia.

In the U.S., investor optimism that the Trump administration and Congress will soon reach a deal on another round of stimulus for the economy has waned.

“The markets’ on again off again love affair with an impending stimulus torrent masks the fact that investor uncertainty is bristling ahead of an expected choppy period in terms of headline risk,” Stephen Innes of Axi said in a commentary.

Meanwhile, campaign theatrics continue, with the latest question whether the debate scheduled next week between President Donald Trump and former Vice President Joseph Biden will go ahead as planned. The clash planned for this week was called off after Trump’s bout of coronavirus. Biden has said he plans to participate in next week’s debate but intends to ask Trump to take a COVID-19 test before arriving.

Investors are also watching for earnings reports for indications of how businesses are holding up amid the pandemic. Rising COVID-19 cases may bring more social distancing restrictions and limits on public life, including a possible return to lockdowns that are damaging to growth.

In energy trading, benchmark U.S. crude lost 28 cents to $40.68 a barrel in electronic trading on the New York Mercantile Exchange. It gave up 8 cents on Thursday to $40.96. Brent crude, the international standard, fell 37 cents to $42.79 a barrel.

The U.S. dollar stood at 105.24 Japanese yen, down from 105.42 yen late Thursday. The euro cost $1.1715, little changed from $1.1710.

7 Stocks That Will Help You Forget About the Fed

Normally when the Federal Reserve (i.e. the Fed) makes an announcement, the market reacts predictably. That’s due, in large part, to the nature of what the Fed normally announces. Will interest rates go up, down, or remain unchanged? And for their part, the markets have a pretty good idea what the Fed will do before they do it.

But the Fed’s announcement of August 26 was a little different. They talked briefly about interest rates (they’re staying really low for a long time). But they were more concerned about inflation. Well, the Fed is always concerned about inflation, but this time they really mean it. Basic economics says that low-interest rates should spur inflation.

However, the market has been defying conventional wisdom and the Fed is not getting the inflation they want. So the Fed has basically said that they’re letting inflation go rogue. If it goes above their target 2% rate, so be it. The Fed is done trying to hit a target.
At first, the markets cheered the news. Not only was the Fed not taking away the punch bowl, but they were also going to keep the low rate liquidity going for a long time!

But after a little while to digest things, investors are realizing they have to be grown-ups about this. And now investors are considering how to rebalance their portfolios for the remainder of 2020.

I don’t know about them, but if I were you I would target companies that have a high free cash flow (FCF). Whether it’s your personal finances or in evaluating a stock, cash flow is your friend.

When a corporation has high FCF, they have more strong growth in good markets and more flexibility during when the economy is weaker.

As institutional investors come back into the market, it’s time for you to reposition your portfolio for whatever comes next.

View the “7 Stocks That Will Help You Forget About the Fed”.

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