Global shares slide as hopes of economic recovery fade
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Data showed a surprise increase in the number of Americans filing new claims for unemployment benefits, reinforcing the view that the economic recovery is in peril.
Adding to those concerns, the Federal Reserve this week has talked up the importance of a fiscal stimulus in the United States. But political focus has shifted toward the Nov. 3 presidential election and a Supreme Court nomination, which make it harder for Congress to agree on a stimulus package.
The Dow Jones Industrial Average fell 70.55 points, or 0.26%, to 26,692.58, the S&P 500 lost 1.7 points, or 0.05%, to 3,235.22 and the Nasdaq Composite added 23.91 points, or 0.22%, to 10,656.90.
The pan-European STOXX 600 index lost 1.15% and MSCI’s gauge of stocks across the globe shed 0.68%.
Emerging market stocks lost 1.91%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 2.19% lower, while Japan’s Nikkei lost 1.11%.
Flows into the dollar helped it rise for a fifth straight day against a basket of peers as investors seek safety.
“Optimism on the recovery, optimism on the virus, and bets on stimulus were keeping markets well bid, and on all three of these issues there has been a degree of disappointment this month,” said John Velis, an FX and macro strategist at BNY Mellon.
The dollar index rose 0.179%, with the euro down 0.13% at $1.1644.
The Japanese yen weakened 0.08% versus the greenback at 105.47 per dollar, while Sterling was last trading at $1.2716, down 0.05% on the day.
Oil prices ticked lower, tracking post-settle trading the previous session, as the bullish impact of a fall in US inventories was offset by a stronger dollar and a renewed wave of coronavirus cases in Europe.
US crude recently fell 0.25% to $39.83 per barrel and Brent was at $41.57, down 0.48% on the day.
US Treasury yields fell on Thursday as labour market data indicated the economic recovery may be stalling, but moved off lows after a stronger-than-expected report on the housing sector.
Benchmark 10-year notes last rose 4/32 in price to yield 0.6642%, from 0.676% late on Wednesday.
In emerging markets, Turkey surprised traders with a hike in its policy rate by 200 basis points to 10.25%, sending the lira and bonds higher.
I cannot save every job: Britain’s government launched scaled-back job support on Thursday for workers hit by the resurgent COVID-19 pandemic, but warned not everyone could be helped during an economic meltdown that is threatening millions of jobs.
Finance minister Rishi Sunak also unveiled plans to extend loan repayments for businesses and delay ending a tax cut for the hospitality sector that has been drastically hit by coronavirus restrictions.
Despite the state support, unemployment looks set to surge by the end of the year, with major employers from British Airways to Rolls-Royce and Marks & Spencer shedding jobs rapidly.
“I cannot save every business, I cannot save every job,” Sunak told parliament as he announced his Winter Economy Plan, which replaced a planned budget statement and set out a six-month replacement for the jobs furlough scheme.
“As the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough.”
Prime Minister Boris Johnson said his finance minister was right to warn the public that things were going to be tough.
Sunak later told reporters it was impossible to predict how many jobs his new measures would save, and that forecasts of fast-rising unemployment by the Office for Budget Responsibility and Bank of England (BoE) “don’t make for good reading”.
Separately, The IMF spokesman said on Thursday that global economic outlook is less bleak than in June, signaling that the organisation’s forecast will be raised when it is released next month.
“The recent incoming data suggests that the outlook may be somewhat less dire than at the time of the (World Economic Outlook) update on June 24 with parts of the global economy beginning to turn the corner,” the International Monetary Fund spokesman said.
But the spokesman said “the outlook remains very challenging,” with emerging markets other than China facing a “precarious” situation due to the coronavirus.
Agencies
