Stock markets failed to mount a rebound on Tuesday, October 27, after dropping sharply the day before on fears that a coronavirus resurgence will force fresh economically painful containment measures.
Traders have also given up almost any hope for a new US stimulus package being passed before the next election, with Democrats and Republicans blaming each other, while President Donald Trump said on Tuesday he expects a bill to pass after the November 3 election.
The prospects of US lawmakers approving another round of stimulus has kept stock markets buoyant for weeks, but when the US Senate wrapped up its session on Monday, October 26, traders conceded they were not going to get what they wanted.
“This means that investor sentiment will be dominated by the resurgent coronavirus until at least the election day, as well company earnings,” said Fawad Razaqzada, a market analyst with ThinkMarkets.
European stocks added to hefty losses on Monday as more nations moved towards imposing tougher restrictions and even lockdowns in order to slow the spread of the coronavirus, which are sure to cause further economic pain.
On Wall Street, both the Dow and S&P 500 continued to fall, but the Nasdaq mustered.
The tech-rich index’s rise reflects the sector’s better positioning “if growth wavers due to COVID,” said Quincy Krosby, Prudential Financial’s chief market strategist.
The Nasdaq also garnered support from a blockbuster $35-billion acquisition by Advanced Micro Devices (AMD), a leading maker of computer chips.
Asia’s leading indices closed mixed.
Oil prices rebounded after steep falls on Monday, while the dollar rose against the pound and euro.
Further lockdowns could trigger widespread job losses as many companies can no longer hold out, analysts fear.
“The second and third wave spread of COVID-19 is possibly triggering a point of no return for some industries as the economic damage borders on irreversible,” said Axi strategist Stephen Innes.
With an eye on next week’s US election, he added, “We should expect price action to remain choppy in the days ahead, with investors very reluctant to put on any significant risk ahead of what promises to be a headline-heavy week or two.”
With the pandemic fueling demand for computers and video game consoles as people rely on the internet to work, learn, and play more at home, AMD announced a deal to buy computer chip-making rival Xilinx for $35 billion.
Shares in AMD fell 4.1% even though the company also said that 3rd quarter profit more than tripled from a year ago to $390 million as revenue grew 56% to $2.8 billion, beating expectations.
A number of leading US companies posted earnings reports that beat expectations, including Caterpillar, 3M, Pfizer, and Merck.
But analysts at Charles Schwab brokerage said that, at this point for investors, “actual earnings numbers may be less important than what corporate leaders say about their expectations” for the future.
Given the amount of uncertainty, many companies are not providing full-year guidance on their earnings.
Key figures around 9 pm GMT
- New York – Dow: DOWN 0.8% at 27,463.19 (close)
- New York – S&P 500: DOWN 0.3% at 3,390.68 (close)
- New York – Nasdaq: UP 0.6% at 11,431.35 (close)
- London – FTSE 100: DOWN 1.1% at 5,728.99 (close)
- Frankfurt – DAX 30: DOWN 0.9% at 12,063.57 (close)
- Paris – CAC 40: DOWN 1.8% at 4,730.66 (close)
- EURO STOXX 50: DOWN 1.1% at 3,070.60 (close)
- Tokyo – Nikkei 225: FLAT at 23,485.80 (close)
- Hong Kong – Hang Seng: DOWN 0.5% at 24,787.19 (close)
- Shanghai – Composite: UP 0.1% at 3,254.32 (close)
- Euro/dollar: DOWN at $1.1789 from $1.1810 at 9 pm GMT
- Dollar/yen: DOWN at 104.41 yen from 104.84 yen
- Pound/dollar: DOWN at $1.3039 from $1.3212
- Euro/pound: DOWN at 90.38 pence from 90.78 pence
- West Texas Intermediate: UP 2.6% at $39.57 per barrel
- Brent North Sea crude: UP 1.8% at $41.20 per barrel
There are no comments yet. Add your comment to start the conversation.