NEW YORK, Sept 26 ― Stocks fell 2 per cent around the globe this week and the dollar posted its strongest weekly performance since April as concern over the economic effect of a second wave of coronavirus-related lockdowns weighed on investors' risk appetite.
But tech stocks led the way higher on Wall Street yesterday, as they have of late on days governed by worries over the economic recovery. The gains more than offset losses in Europe and an index of major stock markets globally rose 1 per cent on the day.
Other than Covid-19 angst, the week was dominated by speculation over the likelihood of another stimulus package to support the American economy.
“There's evidence of a slowdown in the United States, which we think is temporary, but it would be reinforced if there is no additional fiscal package,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
On Wall Street, the Dow Jones Industrial Average rose 358.52 points, or 1.34 per cent, to 27,173.96, the S&P 500 gained 51.87 points, or 1.60 per cent, to 3,298.46 and the Nasdaq Composite added 241.30 points, or 2.26 per cent, to 10,913.56.
The S&P posted four consecutive weekly losses, the longest such streak in over a year. It is down nearly 6 per cent in September.
The pan-European STOXX 600 index lost 0.10 per cent and MSCI's gauge of stocks across the globe gained 1.03 per cent. Despite yesterday's strong gains, the global index fell 2 per cent for the week.
Emerging market stocks rose 0.13 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.51 per cent higher, while Japan's Nikkei rose 0.51 per cent to end a three-day week.
Treasuries remained little changed in a week where the 10-year yield traded in a 5-basis-point range.
“Overall the market remains fairly range-bound. There is some intraday, intra-week volatility that when you really look at it, we just don’t go anywhere,” said Justin Lederer, an interest rate strategist at Cantor Fitzgerald.
Benchmark 10-year notes last rose 3/32 in price to yield 0.6561 per cent, from 0.664 per cent late on Thursday.
But the relapse in sentiment has hit emerging market debt, especially countries with weak credit ratings. Argentina's newly restructured bonds have lost around 25 per cent in under a month, making it the worst return to markets since Greece in 2012, while plenty of other countries have seen 10 per cent slides.
China's government bonds gained acceptance into one of the world's most coveted bond benchmarks, the FTSE Russell WGBI. CGBs will be introduced late next year.
In currency markets, the dollar index climbed for the fourth time this week and set its strongest weekly showing since April.
The dollar index rose 0.315 per cent yesterday, with the euro down 0.39 per cent to US$1.1626 (RM4.85).
The Japanese yen weakened 0.16 per cent versus the greenback at 105.59 per dollar, while sterling was last trading at US$1.2741, down 0.06 per cent on the day.
JB Mackenzie, managing director of futures and forex at TD Ameritrade, sees increasing volatility ahead of the November 3 US election and as a result, more demand for the dollar.
“The election and stimulus and the continued economic recovery, those three parts, if those are not working lock step, there very well could be a movement to the dollar as that flight to safety trade,” said Mackenzie.
The Russian rouble sank 1.2 per cent to a near six-month low of 78.23 to the US dollar. Geopolitical concerns further weighed on Russian assets with the threat of sanctions over the poisoning of Kremlin critic Alexei Navalny, in which Moscow denies wrongdoing. The crisis in neighboring Belarus also continued to linger.
The dollar's strength this week has also battered commodities, with gold on track for its biggest weekly drop in at least six. Yesterday, spot gold dropped 0.4 per cent to US$1,861.46 an ounce.
Silver tumbled 14 per cent this week, a drop not seen in over six months. The spot price fell 1.33 per cent to US$22.90 on the day.
Oil prices fell for the day and week mostly due to mounting worries about the impact on fuel demand of a widespread resurgence in coronavirus infections.
US crude recently fell 0.5 per cent to US$40.11 per barrel and Brent was at US$41.86, down 0.19 per cent on the day. ― Reuters
