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Global stocks, dollar slide as Trump's tweet on election rattles markets
July 30, 2020
BOSTON (Reuters) – Stock markets, oil prices and the dollar slid on Thursday after President Donald Trump raised the possibility of delaying the U.S. presidential election scheduled for November, an unprecedented move that unnerved investors.
Trump, without evidence, repeated his claims of mail-in voter fraud and raised the question of a delay, writing in a post on Twitter, “delay the election until people can properly, securely and safely vote???”
“It’s moved the market, for sure,” said Priya Misra, head of global rates strategy at TD Securities in New York. “Not only do we have uncertainty about who wins, I think we have uncertainty about the process.”
Ken Polcari, chief market strategist at SlateStone Wealth LLC in Jupiter, Florida said markets had expected Trump to lose in November, but not by how much.
“There is a possibility that not only does he lose but they sweep the whole thing and it goes really far to the left,” Polcari said.
The MSCI world equity index .MIWD00000PUS, which tracks shares in 49 nations, fell 7.73 points or 1.39%, to 547.74.
On Wall Street, the Dow Jones Industrial Average .DJI fell 451.58 points, or 1.7%, to 26,087.99, the S&P 500 .SPX lost 44.29 points, or 1.36%, to 3,214.15 and the Nasdaq Composite .IXIC dropped 99.48 points, or 0.94%, to 10,443.47.
A report on initial jobless claims had set Wall Street up to open lower as it showed the economy slipping after an early strong response to the coronavirus. A report on U.S. gross domestic product showed how much the economy had slowed in the second quarter.
Dismal earnings reports and weaker-than-expected German GDP data added to an already sour mood, with the STOXX 600 slipping about 2.1%.
Earlier gains in Asian shares were undone, with MSCI’s broadest index of Asia Pacific shares outside of Japan .MIAPJ0000PUS trading flat.
U.S. GDP collapsed at a 32.9% annualized rate last quarter, slightly less than expected, but still the deepest decline in output since the government started keeping records in 1947, the Commerce Department said on Thursday.
“The fact that it was better than expected maybe is a good thing, but certainly not much better, and it’s still a terrible number,” said Randy Frederick, vice president of trading and derivatives with the Schwab Center for Financial Research.
The worries came despite news on Wednesday that all U.S. Federal Reserve members voted as expected to leave the target range for short-term interest rates between 0% and 0.25%, where it has been since March 15, when the new coronavirus was beginning to hit the nation.
The unchanged policy setting together with a pledge the Fed would use its “full range of tools” if needed boosted risk appetite overnight. All three Wall Street indexes closed higher Wednesday.
But the Fed was already disappearing in the rear-view mirror on Thursday. Investor focus returned to negotiations over a new coronavirus relief package for the world’s largest economy.
U.S. President Donald Trump said on Wednesday that his administration and Democrats in Congress were still “far apart” on a new coronavirus relief bill. A failure to agree risks letting a $600-per-week unemployment benefit lapse when it expires this week.
In currencies, the dollar index fell 0.15% and remains on course for its worst monthly performance in a decade. [USD/]
The dollar =USD has fallen on expectations the Fed will maintain its ultra-loose monetary policy for years to come and on speculation it will allow inflation to run higher than it has previously indicated before raising interest rates.
The dollar’s weakness has further supported the euro EUR=, which was up 0.13% to $1.1805.
Treasuries Benchmark 10-year notes US10YT=RR last rose 11/32 in price to yield 0.5462%, from 0.581% late on Wednesday.
Oil prices fell amid concern that surging coronavirus infections worldwide would jeopardise a recovery in fuel demand. [O/R]
U.S. crude CLc1 was down 2.2% at $40.36 per barrel and Brent LCOc1 was at $42.91, down 1.92% on the day.
Spot gold XAU= dropped 0.6% to $1,959.63 an ounce.