GLOBAL MARKETS-Equities dip, safe havens rise as U.S. stimulus talks stall

(Updates through close of U.S. trading)
By David Randall
NEW YORK, July 28 (Reuters) - An impasse in U.S. economic
stimulus negotiations and mixed corporate earnings reports in
Europe pushed global equities lower and sent investors into
safe-haven assets like government bonds and gold, which hovered
near record highs.
U.S. Senate Republicans on Monday announced a $1 trillion
coronavirus aid package, which Senate Majority Leader Mitch
McConnell touted as a "tailored and targeted" plan to reopen
schools and businesses. But Democrats called it too limited
compared with their $3 trillion proposal that passed the House
of Representatives in May, while some Republicans called it too
expensive. Enhanced unemployment benefits of $600 a week expire on
Friday, which would be a blow to the household incomes and
spending power of many Americans. Some 30 million Americans are out of work and states are
tightening lockdown restrictions again, a trend that has renewed
worries about an economic recovery and dragged on the U.S.
dollar.
Alan Ruskin, head of G10 strategy at Deutsche Bank, noted
that currencies had been tracking the relative performance of
their economies, so high-ranked economic performance was
associated with stronger currencies.
"One clear pattern is how economies linked most tightly to
China -- including commodity producers as diverse as Australia,
Chile and Brazil -- have tended to perform better than economies
most directly linked to the U.S., notably its NAFTA trading
partners," Ruskin said, referring to Canada and Mexico, the
countries that along with the U.S. are party to the trade deal
that has replaced the North American Free Trade Agreement.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.37% following modest declines in Asia and broad gains in
Europe. On Wall Street, the Dow Jones Industrial Average .DJI
finished down 205.21 points, or 0.77%, to 26,379.56, the S&P 500
.SPX lost 20.87 points, or 0.64%, to 3,218.54, and the Nasdaq
Composite .IXIC dropped 134.18 points, or 1.27%, to 10,402.09.
The rest of the week will see 179 S&P 500 companies
reporting second-quarter earnings, including Google parent
Alphabet Inc GOOGL.O , Amazon.com Inc AMZN.O and Apple Inc
AAPL.O , which all report on Thursday.
Spot gold XAU= added 0.7% to $1,956.27 an ounce. U.S. gold
futures GCc1 fell 0.12% to $1,944.70 an ounce.
Goldman Sachs analysts, in a research note, cited emerging
concerns about the "longevity of the U.S. dollar as a reserve
currency." "We have long maintained gold is the currency of last
resort, particularly in an environment like the current one
where governments are debasing their fiat currencies and pushing
real interest rates to all-time lows," the analysts wrote.
Gold is up over $125 in little more than a week as investors
bet the Federal Reserve will reaffirm its super-accommodative
policies at its two-day meeting ending on Wednesday, and perhaps
signal a tolerance for higher inflation in the long run.
The dollar has been falling almost across the board for a
month. It reached a two-year low against a basket of currencies
at 93.416 overnight before recovering to 93.975 =USD .DXY .
The euro EUR= dropped back to $1.1715 after rising to its
highest level in two years, at $1.1781. The dollar had touched
its lowest mark against the Swiss franc since mid-2015 CHF= .
It also fell to a four-month low of 105.10 against the Japanese
yen JPY= before squatting at 105.25.
Benchmark 10-year notes US10YT=RR last rose 9/32 in price
to yield 0.579%, from 0.609% late on Monday.
Oil prices fell on concerns of declining demand on the
economic uncertainty linked to the coronavirus. U.S.
crude CLc1 recently fell 1.61% to $40.93 per barrel and Brent
LCOc1 was at $43.12, down 0.67% on the day.

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