NEW YORK (Reuters) – Global equity benchmarks tumbled and US government bonds rallied Thursday as US tech stocks stalled after the European Central Bank left its stimulus program and a law of regulation unchanged. stimulus failed in the US Senate.
The MSCI index of shares in the world .MIWD00000PUS it lost 1.06% after modest decline in Europe and gains in Asia.
On Wall Street, the Dow Jones Industrial Average .DJI It fell 406.02 points, or 1
The ECB’s decision not to step up its stimulus program strengthened the euro, which has gained more than 8% against the dollar since the spring and more than 4% against the bloc’s foreign trade-weighted basket of currencies.
The dollar index = USD increased by 0.159%, with the euro EUR = up 0.1% to $ 1.1814.
Economists have said the ECB will likely need to take more action to prop up its economy, perhaps in December.
“But by resisting calls to cut interest rates deeper into negative territory, the bank has cemented the euro’s appeal to global investors. It is now walking a tightrope in currency appreciation, as it dares not let the euro rise too high for fear of hindering the recovery of export-dependent economies like Germany, “said Ulas Akincilar, head of trading at the Infinox online broker.
In the United States, initial applications for state unemployment benefits were slightly above expectations and reached a total of 884,000 seasonally adjusted for the week ending September 5. This corresponded to the number of applications received in the previous week, as layoffs and permits persisted across all sectors.
On Thursday, the US Senate killed a Republican bill that would have provided about $ 300 billion in aid for the novel coronavirus, as Democrats seeking far more funding prevented it from moving forward. The failure of the measure left the future of any further coronavirus aid ahead of November’s presidential election in doubt.
Mizuho Bank’s head of economics and strategy in Singapore, Vishnu Varathan, said investors were grappling with whether this month’s massive US tech sell-off was over, plus an increasingly uncertain US political outlook and persistent Sino-US tensions.
“It is too early to say whether the rout is over or whether last night’s recovery is simply a pause,” ANZ analysts said in a statement Thursday, referring to Wednesday’s equity rebound.
As a sign of an unstable day in the markets, safe haven assets such as US government bonds reversed course and rallied in the US close.
10-year reference notes US10YT = RR The latest rose 6/32 in price to make 0.6837%, up from 0.703% late on Wednesday.
Concerns about fuel demand have also put pressure on oil prices, indicating a wavering confidence in global growth. [O/R]
US crude CLc1 recently fell by 2.37% to 37.15 dollars a barrel and Brent LCOc1 it was at $ 39.79, down 2.45% on the day.
Reporting by David Randall; Editing by Will Dunham, Steve Orlofsky, Dan Grebler and Cynthia Osterman