Last checked at 
* A look at the day ahead from EMEA deputy markets editor
Sujata
Rao. The views expressed are her own
LONDON, July 8 (Reuters) - Share markets are wavering after
snapping a five-day winning streak on Tuesday when world stocks
tumbled 1% and all three U.S. indexes closed in the red.
This morning, Wall Street futures and European equities are
both lower, Treasury yields are close to the one-week lows they
plumbed on Tuesday and German yields are 2 basis points lower.
China's Shanghai and Shenzhen benchmarks continued to march
higher in what's widely seen as a state-sanctioned rally.
In keeping with the jittery mood, the dollar is holding firm
as is gold. The Chinese rally has stoked demand for commodities,
pushing Shanghai copper to its highest in more than a year.
Chinese equity gains – the seventh day in a row – also pushed
emerging equities 0.7% higher.
The most obvious explanation for the pullback is the rise in
U.S. coronavirus cases, with 3 million confirmed cases and
localised activity restrictions. Atlanta Fed President Rafael
Bostic said there was a real sense the coronavirus crisis "might
go on longer than we have planned for".
Criticism of U.S President Donald Trump's handling of the
crisis is seen damaging his re-election chances, forcing Wall
Street to contend with the possibility of a Democrat
administration, higher taxes and tighter regulation.
Markets may also be hankering after another dose of stimulus
– Fed Vice Chair Richard Clarida said there was no limit to how
much bond buying the Fed could do.
The Cleveland Fed's Loretta Mester, meanwhile, called for
more help from the fiscal side. She may have hit the nail on the
head -- there's some unease as the scheme to supplement U.S.
jobless payments expires at the end of July just as the COVID-19
spike threatens to derail new hiring.
Consultancy Oxford Economics points out the worsening
coronavirus comes just as liquidity provision from central banks
and governments is slowing – central banks' balance-sheet growth
isn't accelerating any more, while some governments seem wary of
further fiscal measures that risk adding to debt.
Barclays said this morning in its annual equity-gilt study
that while all the extra borrowing is needed, deficits will need
to be addressed some day, with higher taxes part of the
solution.
Speaking of fiscal stimulus, British finance minister Rishi
Sunak is expected to announce measures to counter the jump in
unemployment. Aside from spending 3 billion pounds to improve
energy efficiency, he could announce VAT cuts, lower property
purchases taxes and vouchers to aid hospitality businesses. The
pound is holding near three-week highs before his speech.
In European corporate news, AstraZeneca and Merck &
Co said their cancer treatment Lynparza won European
Union approval for treating a form of pancreatic cancer.
Shares in Traton were down 3.6% after the company
announced management changes. Deutsche Post
was up 1.3% after reporting a 16% rise in
second-quarter operating profit.
In coronavirus-linked bad news, logistics company DHL may
cut as many as 2000 UK jobs, the Unite trade union said;
FirstGroup warned on its ability to continue as a going
concern, after posting an annual operating loss and plunging
passenger volumes; OMV second-quarter output dropped
5% in wake of coronavirus pandemic.
In emerging markets, China's yuan is near 7 to the dollar
after briefly breaking through the threshold on Tuesday.
Nigeria' naira fell 5.5% on Tuesday following central bank FX
sales at a lower rate -- possibly after pressure from lenders
and markets to unify its plethora of exchange rates.
Non-deliverable forwards see the naira losing a fifth of its
value over the next 12 months.
(Editing by Larry King
)
