US markets fall, European stocks fall to five-month low

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US stocks fell and European stocks fell to a five-month low as rising coronavirus infections and tougher lockdowns added to concerns about the economic blow from the pandemic.The S&P 500 Index fell nearly 2% as profits rose amid a surge in Covid-19 hospitalizations, particularly in the Midwest. General Electric Co. won after the company announced a surprise profit and predicted free cash flow gains. Aircraft maker Boeing Co. collapsed after beating profits, but predicted more job cuts. Microsoft Corp. slipped as investors focused on a forecast that fell short of analysts’ highest expectations, beyond a decidedly bullish earnings and sales report.

The Stoxx Europe 600 index fell 3% after German Chancellor Angela Merkel offered to close bars and restaurants for a month to curb the spread of the virus. Auto and real estate stocks saw the steepest declines.

Haven assets, such as Treasuries and German bunds, rose. The VIX Index, a measure of the volatility of US stocks, hit its highest level since June.

Markets in the United States and Europe have fallen sharply this week as cases of the virus increase and U.S. lawmakers fail to agree on an economic aid package ahead of the November 3 election. Analysts are also warning of increased market volatility ahead of the presidential poll, with some saying a messy and contested outcome is still possible.

“With the increase in COVID cases, markets are concerned that policymakers will react with another severe block,” said Bill Callahan, investment strategist at Schroders. “Those actions that really depend on getting people back to their daily habits are really being affected right now.”

In Asia, equities performed better. The MSCI Asia-Pacific Index edged down on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators monitored by Bloomberg showed that the recovery continued to display mixed signals while remaining broadly stable in October.

Elsewhere, oil fell below $ 38 a barrel in New York after an industry report pointed to a larger than expected increase in U.S. crude inventories. Bitcoin fell after hitting its highest level since January 2018.

Here are some events to watch out for this week:

  • The Bank of Japan and the European Central Bank have monetary policy decisions on Thursday, followed by briefings from Governor Kuroda and President Lagarde.
  • The Communist Party of China Central Committee is holding its plenum until Friday, when it is expected to chart the course for the development of the economy for the next 15 years.
  • Brexit negotiating teams have entered intense daily talks, and these are expected to continue as the two sides work to finalize a deal by mid-November.
  • The first third-quarter U.S. GDP reading on Thursday is expected to be the highest on record after a record plunge in the previous quarter as many businesses were shut down by the pandemic.

Here are the main movements in the markets:

Stocks

  • The S&P 500 Index fell 1.9% at 9:31 a.m. New York time.
  • The Stoxx Europe 600 index fell 2.9 percent.
  • The MSCI Asia-Pacific index fell 0.3 percent.

Devises

  • The Bloomberg Dollar Spot Index rose 0.7 percent.
  • The British pound fell 0.8 percent to US $ 1.2939.
  • The Japanese yen was little changed at 104.39 per dollar.

Obligations

  • The yield on 10-year Treasuries fell two basis points to 0.75%.
  • Germany’s 10-year yield fell two basis points to -0.64 percent.
  • Britain’s 10-year yield fell two basis points to 0.21%.

Basic products

  • West Texas Intermediate crude sank 5.6 percent to US $ 37.38 a barrel.
  • Gold weakened 1.5 percent to US $ 1,880.22 an ounce.

– With the help of Adam Haigh and Greg Ritchie.



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