This content was published on November 19, 2020 – 15:30
(Bloomberg) — U.S. stocks joined a slump in global equities as investors weighed the impact of tougher virus restrictions on economic growth. The dollar advanced from a two-year low.
Utilities and health shares led the S&P 500 Index lower after U.S. weekly jobless claims came in higher than forecast. Nvidia Corp. declines after warning that data-center chip sales will decline. In Europe, cyclical shares took the brunt of the retreat. Norwegian Air Shuttle ASA plunged as much as 18% after seeking protection from creditors. Germany’s Thyssenkrupp AG tumbled after saying it would slash 11,000 jobs amid a cash burn at its steel business.
Treasury yields slipped. Gold dropped for a fourth day amid a drawdown in bullion-backed exchange-traded funds.
No Upside for Europe Stocks Has Strategists Looking to 2021
The bullish fever that lifted the MSCI World Index to an all-time high Monday has softened, with virus cases surging in many parts of the world and public health facilities being pushed to the brink. New York City announced it will close schools and South Australia began one of the world’s toughest lockdowns, with even outdoor exercise and dog-walking banned. In Tokyo, the virus alert was raised to the highest levels as daily infections topped 500 for the first time.
It all means that investors are grappling with how long and how severe the pandemic will be in the months ahead. There’s plenty of economic stress now as businesses struggle under lockdowns, but scientists are also rapidly advancing several vaccine candidates to get life back to normal.
“The darkening economic picture in the near term is starting to more than offset the future vaccine optimism,” Tom Essaye, a former Merrill Lynch trader behind “The Sevens Report” newsletter, wrote to clients. “It’s not that the outlook has become so bleak, it’s just that the market has priced in a lot of good news and relatively little upset. And as it usually does, that may prove overly aggressive in the short term.”
In a report published Thursday, the IMF noted progress on a vaccine, but also said elevated asset prices point to a disconnect from the real economy and a potential threat to financial stability.
“While global economic activity has picked up since June, there are signs that the recovery may be losing momentum, and the crisis is likely to leave deep, unequal scars,” officials at the Washington-based fund said. “Uncertainty and risks are exceptionally high.”
In other markets, the MSCI Asia Pacific Index fell for the first time in 14 days, ending the longest winning run since 1988. Commodities dropped and Bitcoin steadied after surging past $18,000 on Wednesday.
Turkey’s lira strengthened after the country’s new central bank governor raised the benchmark interest rate.
Here are some events to watch out for this week:
- Brexit talks look set to continue as the U.K. and EU approach the latest deadline.
- Bloomberg New Economy Forum virtually convenes global leaders to discuss trade, growing political populism, climate change, and the pandemic. Through Nov. 19.
These are the main moves in markets:
- The S&P 500 Index dropped 0.3% at 10:29 a.m. New York time.
- The Stoxx Europe 600 Index fell 0.8%.
- The MSCI Asia Pacific Index declined 0.3%.
- The MSCI Emerging Market Index dipped 0.7%.
- The Bloomberg Dollar Spot Index climbed 0.2%.
- The euro declined 0.2% to $1.1833.
- The British pound decreased 0.4% to $1.3214.
- The Japanese yen weakened 0.1% to 103.94 per dollar.
- The yield on 10-year Treasuries decreased one basis point to 0.86%.
- Germany’s 10-year yield fell two basis points to -0.57%.
- Britain’s 10-year yield declined one basis point to 0.32%.
- West Texas Intermediate crude fell 0.6% to $41.57 a barrel
- Gold weakened 0.6% to $1,860.29 an ounce.
©2020 Bloomberg L.P.