Domain Registration

US election concerns, record virus cases push stocks down

  • October 20, 2020

Asian stocks slipped on Tuesday as investors adjusted risk exposure heading into the United States election and as a deadline for Washington to pass an economic stimulus bill approached while Europe reported record daily coronavirus infections.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.11 percent lower after US stocks ended Monday’s session in the red. Australian and Japanese stock indices also dipped while MSCI’s gauge of stocks across the globe was 0.09 percent lower.

Investors globally are expressing concerns that the outcome of the November 3 US presidential election could be contested, leaving the world’s biggest economy in political limbo as it struggles to escape the pandemic and revive growth.

“Such an event would very likely upset global markets considerably until the US reaches an accepted resolution,” said American Century Co-chief Investment Officer Keith Creveling.

‘Wild West territory’

Chris Weston, the head of research at Melbourne brokerage Pepperstone, said that while there were worries about the US stimulus package, recent declines were more likely due to investors taking precautionary positions ahead of the election.

“Do you really want to hold those exposures into what could be a volatility event?” Weston said. “We’re getting into the Wild West territory where it becomes more whippy.”

Japan’s Nikkei 225 index slipped by 0.34 percent. Hong Kong’s Hang Seng index bucked the regional trend, rising by 0.16 percent.

Investors await key earnings results later in the week for companies including Netflix Inc and Tesla Inc.

Debate outcome

They were also waiting to see if the final debate between US President Donald Trump and his Democratic challenger Joe Biden on Thursday shifts the trajectory of the election.

In New York, the Dow Jones Industrial Average fell 1.44 percent, the SP 500 was 1.63 percent lower and the Nasdaq Composite settled down 1.65 percent.

European shares closed lower as surging COVID-19 cases raised investor concerns. Parts of the United Kingdom were put into lockdown and France imposed curfews.

The number of new COVID-19 cases in the US last week rose 13 percent to more than 393,000, approaching levels last seen during a northern summer peak, according to figures compiled by the Reuters news agency.

In contrast to equity markets, currency investors were less pessimistic about the prospect of a stimulus breakthrough with the safe-haven dollar edging slightly lower amid expectations that US legislators might still agree on a fiscal stimulus package at the 11th hour.

US dollar moves, however, were modest with the dollar index 0.015 percent lower on Tuesday. The dollar rose 0.03 percent against the yen to 105.46 while the euro was up 0.03 percent to $1.1772.

The Australian dollar fell 0.2 percent versus the greenback at $0.7045, hurt by expectations that the central bank would soon cut rates and expand its massive bond buying campaign to lower borrowing costs.

In oil markets, US West Texas Intermediate (WTI) crude futures fell 0.3 percent to $40.69 per barrel while Brent crude futures dipped 0.6 percent to $42.36 per barrel.

Article source: https://www.aljazeera.com/economy/2020/10/20/us-election-concerns-record-virus-cases-push-stocks-down

Related News