Coronovirus upstick, stock drop on fading stimulus hope

Stock and oil prices fell on Monday, as coronovirus cases in the US and Europe rose, worries about an economic outlook after Congress and the White House failed to agree on a much-awaited fiscal stimulus agreement.

The S&P 500 dropped 1% in early New York trading. Last week, the broader market index retreated 0.5%. The Dow Jones Industrial Average lagged 1% or 295 points and the Tech-Heavy Nasdaq Composite Index fell 0.9%.

The US reported 60,789 new cases on Sunday, well below recent record-setting levels, but from a week ago. Scientists were expecting the weather to cool, which could cause a second wave of disease, but this is much higher than the first. This tight lockdown is prompting fresh concerns about sanctions and the impact on the economy.

“It is a worrying picture to be sure. David Stubbs, head of investment strategy at JPMorgan Private Bank, said, “You have to pay attention to the possibility that circuit breakers can be implemented by midwinter.” “But we always knew that this recovery would stop. Until then we would not really go into the core of a new cycle, until the health care problem is dealt with.”

Investors are watching negotiations in Congress this week for any indication on advances in negotiations for a fiscal stimulus deal. House Speaker Nancy Pelosi told CNN on Sunday that she was expecting more answers on Monday and that there could be an agreement this week among lawmakers. But Democrats and White House officials are blaming each other for their lack of progress after going over the weekend without a deal, lowering expectations for an agreement before November 3.

Luke Phillip, head of private banking investment at SYZ Private Banking, said, “We doubt that any strong agreement will be reached before the election, we have days to settle.” “This is a game where you show that you want to find a compromise, but I’m not sure of the real desire behind it.”

It has sold American Treasuries, US stocks and dollars for a long time before the election and has instead bought Chinese equities and exchange-traded funds.

“Chinese economic momentum is really showing a lot of strength and this is the only place in this world where you have this mobility,” Mr. Philip said.

Oil prices slipped. International benchmark Brent crude fell 2.2% to $ 40.87 a barrel. The cease-fire in Libya has led analysts to reach 1 million barrels a day over the next four weeks, according to the SEB’s chief commodity analyst Bazne Skrydrop. He added that the increase in coronovirus infection also holds potential for economic recovery and soaking demand.

“We have oil from both sides of the equation. Libya is seeing a rapid increase in supply, ”Mr. Shieldrop said. “At the same time, demand is being affected with a wave of new Kovid-19 cases and new lockdowns.”

Pan-Continental Stocks Europe retreated 1.1% due to a fall in 600 German shares.

Coronavirus cases are increasing in Europe. France reported more than 52,000 new infections on Sunday, a daily high. Italy is trying to rein in proliferation with new rules, such as Spain’s mandatory closing of restaurants and restaurants at 6 pm, declaring a state of emergency, as it did in March.

Among European equities, trading-software maker SAP declined nearly 20% after cutting its outlook for the year and reporting a decline in quarterly sales and profit. The company said that businesses are more cautious about spending and investment.

In Asia, most of the major equity benchmarks closed lower. China’s Shanghai Composite Index fell 0.8%. Markets in Hong Kong were closed for a public holiday.

As federal unemployment assistance moves nationwide, while Congress negotiates a new stimulus bill, some economists worry that the most vulnerable workers are being pushed into poverty. Will low-paid employees like Victoria Rodriguez in McAllen, Texas be left behind? Photo: Brian Woolston / Reuters

In bond markets, the yield on the benchmark 10-year US Treasury note fell to 0.810% from 0.840% on Friday. Rating company S&P Global on Friday evening to remain stable from negative, the yield on Italy’s equivalent bond dropped the most since June, down from 0.673% before falling to 0.710%. Prices rise as yields fall.

The WSJ Dollar Index, which measures the greenback against a basket of currencies, added 0.3%. The Turkish lira weakened 1.6% against the dollar, reaching a record low, with President Erdogan urging the Turks to boycott French goods amid growing tensions between the two countries.

The latest data on the US housing market will be released at 10 am ET. The number of new homes sold in the month of September will be examined by investors as an indicator of consumer spending and economic growth.

Investors are waiting to see if Congress will come to an agreement with the White House before the election on a new stimulus package.


Al Daroga / Bloomberg News

Write Anna Hirtenstein at [email protected]

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