World shares hit five-month high; mixed earnings knock European shares

August 4, 2020

LONDON (Aug 4) - European shares were mixed on Tuesday after company earnings reports, and the dollar’s rebound stalled as investors waited for talks about government aid in the United States to make progress.

Strong U.S. manufacturing data boosted sentiment through the Asian session, even as Sino-U.S. relations took a turn for the worst.

After a rally on Monday, European shares opened higher but quickly slipped into the red, with the pan-European STOXX 600 down 0.3% and London's FTSE 100 flat on the day .FTSE by 1034 GMT.

Disappointing earnings reports from the world’s largest spirits maker, Diageo Plc (DGE.L), and German drugs and pesticides group Bayer (BAYGn.DE) took the shine off growth-linked cyclical stocks.

Shares in BP jumped after it cut its dividend and posted a record loss that was in line with expectations.

The MSCI world equity index .MIWD00000PUS, which tracks shares in 49 countries, was up 0.4% after reaching a five-month high just after 0700 GMT. MSCI’s main European Index .MSER was up 0.1%.

U.S.-China tensions worsened as President Donald Trump said that he will ban Chinese app TikTok in the U.S. unless a tech company such as Microsoft buys it.

The move provoked an outcry on Chinese social media and criticism from a prominent Chinese investor in TikTok’s owner, ByteDance.

China said it would not accept the “theft” of a Chinese company and that is has “plenty of ways to respond if the administration carries out its planned smash and grab”.

“This kind of rhetoric lines up with our view that U.S.-China frictions may increase into the U.S. elections, injecting volatility into related assets like China tech ADRs (American Depository Receipts) while also supporting insurance assets like gold,” wrote UBS Global Wealth Management’s chief investment officer, Mark Haefele.


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