BOSTON, July 31 ― Stock markets, oil prices and the dollar slid yesterday as new government data underscored the deep economic impact of the coronavirus and US President Donald Trump raised the possibility of delaying the November election.
Trump, facing an immediate pushback from top Republicans, repeated his claims, without evidence, of mail-in voter fraud, writing in a post on Twitter, “delay the election until people can properly, securely and safely vote???”
“It's moved the market, for sure,” said Priya Misra, head of global rates strategy at TD Securities in New York. “Not only do we have uncertainty about who wins, I think we have uncertainty about the process.”
Trump's statement compounded investor worry from earlier in the day on additional jobless claims and collapsed gross domestic product.
The MSCI world equity index fell 2.97 points or 0.53 per cent, to 552.5.
On Wall Street, the Dow Jones Industrial Average fell 225.92 points, or 0.85 per cent, to 26,313.65, the S&P 500 lost 12.22 points, or 0.38 per cent, to 3,246.22.
The Nasdaq Composite bucked the trend slightly, adding 44.87 points, or 0.43 per cent, to hit 10,587.81, with technology stocks like Apple Inc, Facebook Inc and Amazon.com Inc reporting strong quarterly earnings after the close of trading.
In Europe, dismal earnings reports and weaker-than-expected German gross domestic product data worsened an already sour mood, with the STOXX 600 closing down 2.2 per cent. Germany's DAX index slid 3.5 per cent, with all 30 components declining.
Earlier gains in Asian shares were undone, with MSCI's broadest index of Asia-Pacific shares outside Japan closing 0.17 per cent lower, while Japan's Nikkei lost 0.26 per cent.
US GDP collapsed at a 32.9 per cent annualised rate last quarter, slightly less than expected, but still the deepest decline in output since the government started keeping records in 1947, the Commerce Department said yesterday.
“The fact that it was better than expected maybe is a good thing, but certainly not much better, and it's still a terrible number,” said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research.
The worries came despite news on Wednesday that all US Federal Reserve members voted as expected to leave the target range for short-term interest rates between 0 per cent and 0.25 per cent, where it has been since March, and use its “full range of tools” if needed.
Investors must now watch negotiations in Washington over a new coronavirus relief package for the world's largest economy.
Trump said on Wednesday his administration and Democrats in Congress were still “far apart” on a new coronavirus relief bill. Failure to agree risks letting a US$600-per-week (RM2,544.30) unemployment benefit lapse when it expires this week.
In currencies, the dollar index, which tracks the greenback versus a basket of six currencies, fell 0.478 points or 0.51 per cent, to 92.975, and remains on course for its worst monthly performance in a decade.
The dollar has fallen on expectations the Fed will maintain its ultra-loose monetary policy for years, which risks adding inflationary pressure.
The benchmark 10-year US Treasury note fell 13/32 in price to yield 0.5397 per cent.
Oil fell on concerns that surging coronavirus infections worldwide would jeopardise a recovery in fuel demand. Brent, the international benchmark, settled down 81 cents at US$42.94 a barrel. US crude futures fell US$1.35 to settle at US$39.92 a barrel.
Spot gold prices fell US$17.8829, or 0.91 per cent, to US$1,952.49 an ounce. US gold futures fell 0.6 per cent to settle at US$1,942.30 an ounce. ― Reuters
