Stock indices declined Tuesday in Europe and the United States as hopes for coronavirus vaccinations and US monetary stimulus competed with fears over surging infections, tougher lockdowns and US turmoil, traders said.
The dollar traded mixed, while oil prices were higher.
The pound was up versus the dollar, and that weighed on the London stock market which features multinationals that earn substantial amounts of their profits in the US currency.
Bitcoin was much steadier after swings of 20 percent in recent days, and traded for around $33,100.
“The fact that vaccines are being rolled out will be comforting for investors but the first quarter is shaping up to be far more painful than anticipated,” said Craig Erlam, analyst at Oanda trading group.
“This may dampen sentiment in the coming weeks, especially if corporate America raises concerns during fourth quarter earnings season, which kicks off later this week.”
Another focus of attention for traders was Washington, where Democrats are seeking a historic second impeachment of Donald Trump, who they accuse of inciting an attack on the Capitol Building that left five people dead.
There is concern however that the move could distract from the Democrats’ plans for a bigger stimulus bill to stem the virus’ impact, and some warn the row could overshadow President-elect Joe Biden’s first months in office.
He has called for a huge package including $2,000 cash handouts, though analysts said that while markets would welcome a spending splurge, there were concerns about the fiscal implications.
Bets on another rescue deal have ramped up inflation expectations, with 10-year Treasury yields above one percent for the first time since March and talk swirling that the US Federal Reserve could begin to consider winding down its vast bond-buying scheme.
“Ultimately it goes back to the 10-year,” Lynx Equity Strategies said in a client note.
A higher yield “points to higher inflation down the road — which is negative for stocks. We are not there yet, but as the 10-year inches higher — the closer we get”, it added.
On Wall Street, the Dow Jones index was slightly softer in early trading, after finishing last week at record highs.
New York – Dow: DOWN 0.1 percent at 30,971.77 points
London – FTSE 100: DOWN 0.6 percent at 6,758.13
Frankfurt – DAX 30: DOWN 0.1 percent at 13,927.28
Paris – CAC 40: DOWN 0.1 percent at 5,658.64
EURO STOXX 50: DOWN 0.2 percent at 3,615.22
Tokyo – Nikkei 225: UP 0.1 percent at 28,164.34 (close)
Hong Kong – Hang Seng: UP 1.3 percent at 28,276.75 (close)
Shanghai – Composite: UP 2.2 percent at 3,608.34 (close)
Euro/dollar: DOWN at $1.2152 from $1.2153 at 2230 GMT
Dollar/yen: UP at 104.28 yen FROM 104.20
Pound/dollar: UP at $1.3597 from $1.3511
Euro/pound: DOWN at 89.38 pence from 89.89 pence
West Texas Intermediate: UP 0.9 percent at $52.69 per barrel
Brent North Sea crude: UP 1.0 percent at $56.20 per barrel
Stocks, Dollar Mixed As Bitcoin Steadies The British Journal Editors and Wire Services/ International Business Times.