stock markets

Mounting virus woes, historic US data shock hit markets

Agence France-Presse, Agence France-Presse
Mounting virus woes, historic US data shock hit markets

(FILES) In this file a trader makes a phone call outside the New York Stock Exchange (NYSE) on July 20, 2020 at Wall Street in New York City. - Wall Street stocks dropped in opening trading on July 30, 2020 following data showing an historic drop in US growth in the second quarter and higher weekly jobless claims. Shortly after the opening bell, the Dow Jones Industrial Average was down 1.2 percent at 26,215.34.The broad-based S&P 500 fell 1.1 percent to 3,223.42, while the tech-rich Nasdaq Composite Index shed 0.9 percent to 10,446.97. (Photo by Johannes EISELE / AFP)

Wall Street has a fairly gloomy session and European bourses also finish lower on Thursday, July 30, following news of the US economy's stunning contraction and companies' massive losses

United States and European equities mostly fell Thursday, July 30, on mounting evidence from corporations and governments of a coronavirus-induced downturn, crystalized by the worst quarterly drop in US growth since records began after World War II.

The slide came on the heels of a gloomy Federal Reserve warning over a US spike in COVID-19 infections, adding to fears of more job losses amid a pandemic that continues to pound the global economy. 

Major Asian trading hubs had managed to limit losses before the US Commerce Department revealed that the world’s largest economy contracted by one-third in the 2nd quarter – the worst decline on record.

In Frankfurt, the benchmark DAX index closed 3.4% lower on data showing that Germany’s powerful economy shrank by a record 10.1% in the 2nd quarter.

Elsewhere, London’s FTSE 100 lost 2.3% and Paris fell by more than 2% on an avalanche of gloomy corporate earnings tied to the impact of the pandemic.

Investor alarm spread in Europe on news of disappointing losses from the likes of aircraft manufacturer Airbus, steelmaker ArcelorMittal, and energy giants Eni and Royal Dutch Shell.

Wall Street also had a fairly gloomy session, with the Dow and S&P 500 finishing solidly lower after the Commerce Department reported the US economy contracted a stunning 32.9% in the 2nd quarter due to business shutdowns.

Perhaps more troubling was new Labor Department data showing that the US saw its 2nd consecutive weekly increase in initial claims for unemployment benefits, with another 1.43 million filed last week.

Capitol Hill deadlock

Congress is currently locked in debate over the size and composition of the next spending bill, with Democrats fighting to retain the $600 additional weekly payment made to unemployed workers set to expire Friday, July 31. 

Republicans want to cut that money and offer businesses that reopen protection if employees become infected.

“The staggering news of the historic decline of the gross domestic product in the 2nd quarter should shock us all,” US Chamber of Commerce executive vice president Neil Bradley said in a statement.

The data “should compel Congress to move swiftly” to provide assistance to unemployed workers and businesses.

While US stocks mostly fell, the Nasdaq was a bright spot, working its way into positive territory and closing up 0.4% ahead of a deluge of earnings reports from big tech companies.

Apple, Amazon, Facebook, and Google parent Alphabet all reported higher profits. Shares of those companies rose in after-hours trading, but the gains came after the stocks won huge increases in recent months that could leave them vulnerable to a sell-off, analyst say.

Key figures around 10 pm GMT
  • New York – Dow: DOWN 0.9% at 26,313.65 (close)
  • New York – S&P 500: DOWN 0.4% at 3,246.22 (close)
  • New York – Nasdaq: UP 0.4% at 10,587.81 (close)
  • London – FTSE 100: DOWN 2.3% at 5,989.99 (close)
  • Frankfurt – DAX 30: DOWN 3.5% at 12,379.65 (close)
  • Paris – CAC 40: DOWN 2.8% at 4,852.94 (close) 
  • EURO STOXX 50: DOWN 2.78% at 3,208.20 (close) 
  • Tokyo – Nikkei 225: DOWN 0.3% at 22,339.23 (close)
  • Hong Kong – Hang Seng: DOWN 0.7% at 24,710.59 (close)
  • Shanghai – Composite: DOWN 0.2% at 3,286.82 (close)
  • Euro/dollar: UP at $1.1839 from $1.1792 at 9 pm GMT 
  • Dollar/yen: DOWN at 104.78 yen from 104.92 yen 
  • Pound/dollar: UP at $1.3088 from $1.2997 
  • Euro/pound: DOWN at 90.40 pence from 90.73 
  • West Texas Intermediate: DOWN 3.4% at $39.86 per barrel 
  • Brent North Sea crude: DOWN 1.9% at $42.94 per barrel