NEW YORK, Sept 22 ― Stocks across the world hit their lowest in seven weeks and other risk assets also sold off yesterday on concerns over renewed lockdown measures in Europe and Britain, as well as the United States' inability to agree on fiscal stimulus that would support millions of unemployed.
Oil prices fell more than 3 per cent, the dollar rose against a basket of peers and an index of emerging market currencies fell by the most in six months. The MSCI world equity index , which tracks shares in 49 countries, ended at its lowest since August 3.
Britain is considering a second national lockdown as new cases rise by at least 6,000 per day while Denmark, Greece and Spain have introduced new restrictions on activity. Germany's health minister said rising new infections in countries like France, Austria and the Netherlands are worrying.
Adding to the market's nervousness, the US presidential campaign was upended late Friday after US Supreme Court Justice and liberal icon Ruth Bader Ginsburg died. President Donald Trump said he would announce his candidate to replace her, which requires Senate confirmation, by the end of this week.
Ginsburg's death also decreases the chances of Congress passing another stimulus package to help lift the domestic economy.
“It just kind of crowds out the agenda, the idea that we are going to get a fiscal stimulus package before the election,” said Ed Campbell, portfolio manager and managing director at QMA in Newark, New Jersey.
“There is also just general election-related jitters... and possibly that we have a contested or delayed outcome.”
The US presidential election will be held on November 3.
The Dow Jones Industrial Average fell 509.72 points, or 1.84 per cent, to 27,147.7, the S&P 500 lost 38.41 points, or 1.16 per cent, to 3,281.06 and the Nasdaq Composite dropped 14.48 points, or 0.13 per cent, to 10,778.80.
The pan-European STOXX 600 index lost 3.24 per cent and MSCI's gauge of stocks across the globe shed 1.63 per cent.
Emerging market stocks lost 1.64 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.26 per cent lower.
Japan has public holidays yesterday and today this week, meaning volumes are expected to be thin in Asian trading.
Markets were also hit by a media report on how several global banks moved large sums of allegedly illicit funds over nearly two decades.
The S&P banking subindex fell 3.4 per cent.
‘Concerns rising’
The dollar rose yesterday after two weeks of declines as investors sought safer currencies.
“An unrelenting rise in coronavirus cases globally is weighing on sentiment at the start of the trading week as investors increasingly question their rosy predictions about the recovery,” said Raffi Boyadjian, senior investment analyst at online broker XM.
The dollar index rose 0.609 per cent, with the euro down 0.57 per cent to US$1.177 (RM4.85).
The Japanese yen weakened 0.09 per cent versus the greenback at 104.68 per dollar, while Sterling was last trading at US$1.2816, down 0.77 per cent on the day.
Seven members of the Fed will speak this week, including Chairman Jerome Powell appearing before congressional committees, and investors will be looking for hints to determine the dollar's direction.
Crude oil followed equity markets lower.
“We're looking for a much softer market,” said Gary Cunningham, director of market research at Tradition Energy in Stamford, Connecticut. “The economic picture doesn't look as rosy as it did before.”
US crude fell 3.53 per cent to US$39.66 per barrel and Brent was at US$41.75, down 3.24 per cent on the day.
Benchmark 10-year notes last rose 8/32 in price to yield 0.6691 per cent, from 0.694 per cent late on Friday.
Spot gold dropped 1.9 per cent to US$1,912.19 an ounce. ― Reuters
