Global stocks collapse following growing virus lockdowns

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U.S. stocks joined a collapse in global equities as investors weighed the impact of tighter virus restrictions on economic growth. The dollar advanced from a two-year low.Utilities and healthcare stocks led the S&P 500 Index lower after weekly US jobless claims were higher than expected. Nvidia Corp. decline after warning that data center chip sales will decline. In Europe, cyclical stocks were the main victims of the decline. Norwegian Air Shuttle ASA fell 18% after seeking creditors protection. German company Thyssenkrupp AG fell after announcing it would cut 11,000 jobs because of cash consumption in its steel business.

Treasury yields have fallen. Gold fell on a fourth day amid a draw in bullion-backed exchange-traded funds.

The bullish fever that took the MSCI World Index to an all-time high on Monday has subsided, as cases of the virus increase in many parts of the world and public health facilities are pushed to the brink. New York City has announced school closures and South Australia has initiated one of the world’s toughest lockdowns, even banning outdoor exercise and dog walking. In Tokyo, the virus alert was raised to its highest level, with daily infections surpassing 500 for the first time.

All of this means that investors are grappling with the duration and severity of the pandemic in the months to come. There is now a lot of economic stress as companies struggle under lockdowns, but scientists are also rapidly advancing several vaccine candidates back to normal life.

“The darkening economic situation in the near term is starting to more than offset future vaccine optimism,” wrote to customers Tom Essaye, a former Merrill Lynch trader who ran the “Sevens Report” newsletter. “. “It’s not that the outlook has gotten so bleak, it’s just that the market has incorporated a lot of good news and relatively little upset. And as usual, it can prove to be too aggressive in the short term. ”

In a report released Thursday, the IMF noted progress on a vaccine, but also said high asset prices indicated a disconnection from the real economy and a potential threat to financial stability.

“As global economic activity has picked up since June, there are signs that the recovery may lose momentum, and the crisis is likely to leave deep and uneven scars,” officials of the Washington-based fund said. . “The uncertainty and the risks are exceptionally high.”

In other markets, the MSCI Asia Pacific Index fell for the first time in 14 days, ending the longest winning streak since 1988. Commodities fell and Bitcoin stabilized after breaking above the US $ 18,000 Wednesday.

The Turkish 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 negotiations are expected to continue as the UK and EU approach their final deadline.
  • The Bloomberg New Economy Forum virtually convenes world leaders to discuss trade, growing political populism, climate change and the pandemic. Until November 19.

Here are the main movements in the markets:

Stocks

  • The S&P 500 Index fell 0.3% at 10:29 a.m. New York time.
  • The Stoxx Europe 600 index fell 0.8 percent.
  • The MSCI Asia Pacific Index fell 0.3 percent.
  • The MSCI Emerging Markets Index fell 0.7%.

Devises

  • The Bloomberg Dollar Spot Index climbed 0.2%.
  • The euro fell 0.2 percent to US $ 1.1833.
  • The British pound fell 0.4 percent to US $ 1.3214.
  • The Japanese yen weakened 0.1 percent to 103.94 per dollar.

Obligations

  • The yield on 10-year Treasury bills fell by one basis point to 0.86 percent.
  • Germany’s 10-year yield fell two basis points to -0.57 percent.
  • Britain’s 10-year yield fell one basis point to 0.32 percent.

Basic products

  • West Texas Intermediate crude fell 0.6% to US $ 41.57 per barrel
  • Gold fell 0.6% to US $ 1,860.29 an ounce.

– With the help of Andreea Papuc and Jan-Patrick Barnert.



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