Wall Street recovers losses despite jump in COVID-19 cases and new lockdowns

US stocks have come off their lows despite rising coronavirus cases in North America, and new lockdowns were imposed across cities and states.

New hospitalisations for COVID-19 jumped by almost 50 per cent over the past fortnight and the US death toll surpassed one quarter of a million.

Schools and businesses have been closed to slow the spread of the virus with New York shutting its public schools, the biggest public school system in the country.

Investors were also dismayed by new figures which showed that the number of new claims for unemployment benefits unexpectedly rose as new stimulus measures remained stalled in Congress.

Initial claims for state jobless benefits rose by 31,000 to 742,000, seasonally adjusted last week.

Economists had predicted just over 700,000 new applications.

The report from the US Labor Department also showed at least 20.3 million people on unemployment benefits at the end of October, seven months after the pandemic hit the United States.

Other economic numbers showed that existing home sales rose 4.3 per cent to nearly 6.9 homes last month, the highest level since November 2005.

However, Kenny Polcari, managing partner at Kace Capital Advisors in Florida, said there were fears that the North American economy is stalling.

“What was a decline in jobless claims numbers for the last couple of months has suddenly reversed course, so that only plays into the current theme of the economy getting worse,” he said.

The Dow Jones index lost ground but reversed course in late trade.

It had gained 0.1 per cent to 29,471 at 6:50am AEDT.

The S&P 500 index retreated further from its record closing high hit on Monday following positive data on a coronavirus vaccine, but recovered losses in late trade and rose one fifth of a per cent.

The Nasdaq Composite gained two thirds of a percent, with tech giants Tesla, Alphabet and Amazon rising.

Value stocks, which include banks and industrials, slipped, while growth-linked stocks which are perceived to be less risky, logged small gains.

Upmarket department store Macy’s dropped after posting lower comparable sales.

But it recovered ground in late trade.

European stocks gain despite increasing COVID-19 infections

In Europe, Brexit talks with the European Union were suspended after a negotiator tested positive to coronavirus.

The FTSE 100 in London put on 0.8 per cent to 6,334, the DAX in Germany rose 0.9 per cent to 13,086, and the CAC 40 in Paris gained 0.7 per cent to 5,475.

In futures trade, the ASX SPI 200 index rose 0.2 per cent to 6,553 at 6:30 am AEDT.

The Australian dollar has dipped 0.3 per cent to around 72.86 US cents.

Oil prices pulled back as the surge in virus cases raises concerns about demand.

Brent crude, the international benchmark, lost 0.6 per cent to $US44.09 a barrel.

Spot gold dropped as well by 0.3 per cent to $US1865.50.

IMF warns the economic path ahead ‘difficult and prone to setbacks’

The International Monetary Fund (IMF) said the global economy is recovering from the depths of the depths of the coronavirus crisis, but there are signs of slowing momentum in countries with resurging infection rates.

The IMF said in a new report for G20 major economies said the global recovery was uneven and warned the crisis would likely leave deep, unequal scars.

In a separate blog post, IMF Managing Director Kristalina Georgieva hailed what she called significant progress in the development of vaccines to vanquish a virus that has claimed more than a million lives around the globe and resulted in tens of millions of job losses.

But she cautioned that the economic path ahead remains “difficult and prone to setbacks”.

The IMF last month forecast a 2020 global contraction of 4.4 per cent, with the global economy expected to rebound to growth of 5.2 per cent in 2021, but said the outlook for many less developed economies had worsened.

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