Global stocks fall, gold gains as US economic growth slows sharply

A trader works at Frankfurt's stock exchange in Frankfurt, Germany, January 22, 2020. — Reuters pic
A trader works at Frankfurt's stock exchange in Frankfurt, Germany, January 22, 2020. — Reuters pic

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LONDON, Oct 28 — Global equities retreated from record highs today, while safe-haven gold rose after the US economy grew at its slowest pace in more than a year in the third quarter, hit by an uptick in Covid-19 infections and shortages caused by stretched supply chains.

US gross domestic product increased at a 2 per cent annualized rate last quarter, slowest since the second quarter of 2020 when the economy was beset by pandemic restrictions, the Commerce Department said in its advance GDP estimate on Thursday.

The European Central Bank left its monetary policy unchanged, as widely expected, holding fire before a set of crucial decisions in December on ending pandemic emergency stimulus and returning policy to a more normal setting.

The MSCI All World Stock Index was down 0.06 per cent at 741.31 points, barely below its lifetime high of 749.16 points hit last month.

All three major US stock indexes opened higher today following a week of upbeat quarterly earnings. The Dow Jones Industrial Average rose 0.5 per cent to 35,667.29, the S&P 500 gained 0.54 per cent to 4,576.09 and the Nasdaq Composite added 0.5 per cent to 15,311.62.

The STOXX index of 600 companies fell 0.11 per cent at 473.52 points, some two points below its record high from August and little changed after the ECB’s statement.

“The markets are caught in a bit of a no-man’s land of optimism that earnings are going to continue to be positive, against pessimism that inflation is going to crimp profit margins,” said Michael Hewson, chief markets analyst at CMC Markets.

“Even if there has been no evidence of that, we need to get these central bank meetings out of the way as they are keeping investors on tenterhooks,” Hewson said.

Gold prices edged higher, drawing support from the European Central Bank’s decision to keep policy unchanged as expected, which allayed investor fears of an imminent interest rate hike.

Spot gold was up 0.3 per cent to US$1,802.60 per ounce. US gold futures gained 0.5 per cent to US$1,806.90. — Reuters

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