World shares slip after Wall Street’s worst day in a month

AP – Shares skidded in Europe and Asia yesterday after surging coronavirus cases and waning hopes for United States (US) economic stimulus gave Wall Street its worst day in a month.

Stock benchmarks fell in Paris, London, Hong Kong, Sydney and Seoul. Tokyo was flat. Shanghai recovered from early losses to edge higher.

Overnight, the S&P 500 fell 1.9 per cent, deepening its losses from last week. Stocks of companies worst hit by the pandemic logged some of the biggest losses. Cruise lines, airlines and energy stocks tumbled in tandem with crude oil prices.

In another sign of caution, Treasury yields pulled back after touching their highest level since June last week and were steady at 0.80 per cent yesterday.

Unease over possible economic disruptions from a resurgence of COVID-19 outbreaks has added to uncertainties with the US presidential vote just one week away.

Doubts are mounting that Washington will come through with more stimulus for the economy before the November 3 Election Day after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed to reach an agreement to send cash to most Americans, restart supplemental benefits for laid-off workers and provide aid to schools, among other things.

“There are only eight days left for the US presidential election and there are still no signs of second stimulus package. There is no doubt that investors have become a lot more nervous now than before,” Naeem Aslam of Avatrade.com said in a commentary.

Germany’s DAX lost 0.3 per cent to 12,136.88 while the CAC 40 in Paris slipped 0.6 per cent to 4,786.86. In Britain, the FTSE 100 gave up 0. per cent to 5,775.35. US futures were little changed, with the contract for the Dow industrials flat and the S&P 500’s up less than 0.1 per cent.

A woman walks past a bank’s electronic board showing the Hong Kong share index at Hong Kong Stock Exchange. PHOTO: AP

Coronavirus counts are surging in much of the US and Europe, raising concerns about more damage to still-weakened economies. In Europe, Spain’s government declared a national state of emergency that includes an overnight curfew, while Italy ordered restaurants to close each day by 6pm and shut down gyms, pools and movie theatres.

The gloom carried into trading in Asia, where Japan’s Nikkei 225 was almost unchanged at 23,485.80. The Hang Seng in Hong Kong slipped 0.5 per cent to 24,787.19. South Korea’s Kospi lost 0.6 per cent to 2,330.01, while the S&P/ASX 200 slumped 1.7 per cent to 6,051.00. The Shanghai Composite index recovered from early losses, edging 0.1 per cent higher to 3,254.32.

India’s Sensex advanced 0.5 per cent to 40,352.94.

South Korea reported better than expected 1.9 per cent quarter-on-quarter economic growth in the last quarter, following a 3.2 per cent quarterly decline in April-June.

On an annual basis, the economy contracted 1.3 per cent, compared with expectations for a 1.8 per cent decline according to FactSet. Strong exports led the rebound, economists said.

Overnight, the S&P 500 dropped to 3,400.97, while the Dow slumped 2.3 per cent,  to 27,685.38.

The Nasdaq composite lost 1.6 per cent to 11,358.94. Smaller company stocks also took heavy losses, knocking the Russell 2000 index down 2.2 per cent, to 1,605.21.

The US economy recovered a bit since stay-at-home restrictions that swept the country earlier this year eased. Economists expect a report tomorrow to show it grew at an annual rate of 30.2 per cent during the summer quarter after shrinking 31.4 per cent during the second quarter.

But momentum slowed after a round of supplemental unemployment benefits and other stimulus that Congress approved earlier this year expired.

Yesterday, oil prices steadied, with US benchmark crude gaining 17 cents to USD38.73 per barrel in electronic trading on the New York Mercantile Exchange. It skidded USD1.29 to USD38.56 on Monday.

Brent crude, the international standard, picked up 19 cents to USD41 per barrel.

This week is the busiest of this quarter’s earnings season, with more than a third of the companies in the S&P 500 index scheduled to report. Besides Amazon and Apple, Ford Motor, General Electric and Google’s parent company, Alphabet, are also on the docket.

Across the S&P 500, profit reports for the summer have been mostly better than Wall Street feared, though they are still on pace to be more than 16 per cent lower than year-ago levels.

In currency trading, the dollar bought JPY104.78, down from JPY104.86 late Monday. The euro weakened to USD1.1804 from USD1.1811.