LONDON / SHANGHAI (Reuters) – Global shares plummeted on Friday as hopes of a fiscal stimulus provided by a $ 1.9 trillion US stimulus plan were shattered by the prospect of tighter locks in France and Germany and re- resurgence of COVID-19 cases in China.
European stocks followed lower Asian markets, with the pan-European STOXX 600 down 0.4% and London FTSE 100 0.6% weaker, with the latter rounded up with data showing that the British economy traveled in November for for the first time since the first COVID-19 was locked last spring as social speed rules tightened.
The MSCI global equality index, which monitors shares in 49 countries, was 0.2% lower. S&P 500 e-mini futures are peaking 0.3% to 3,779.
Earlier on Friday, the Asian regional sector index had approached higher levels than after US President Joe Biden proposed a $ 1.9 trillion stimulus plan to jump the world’s largest economy and accelerated response to the coronavirus.
In prime-time comments, Biden outlined a $ 415 billion proposal targeting the COVID-19 response, some $ 1 trillion in direct relief for households, and about $ 440 billion for small businesses and communities hard hit by the pandemic.
But that initial rise escaped later when risk appetite declined, bond prices and the dollar rose, and rations hit.
“People say it’s a large number but markets are almost a disappointment,” said James Athey, investment director at Aberdeen Standard Investments.
“I think the market may have priced an extra $ 2,000 check going to the U.S. population, but a $ 1,400 reconstruction is planned to bring the total to $ 2,000 because $ 600 has already been agreed. ”
Investors also dug up plans to raise fees to pay for the plan.
“This is a tax-driven concern,” said Tim Ghriskey, Inverness Councillor’s chief investment strategist for New York.
“It’s easy to spend money but the question is how do you pay for it? Markets often evade politics but often do not evade taxes. ”
PROSPECTS REFORM
Biden’s comments came after Federal Reserve Chairman Jerome Powell struck a dovish tone in remarks at a keynote conference with Princeton University.
Powell said the U.S. central bank is not raising interest rates anytime soon and rejected suggestions that the Fed could start reducing bond purchases soon.
Investors’ concerns about the prospect of a global economic recovery have been raised after France strengthened its border controls and extended its night curfew by two to 6pm for at least two weeks to try to slow the spread of coronavirus infections, while German Chancellor Angela Merkel has called for “very swift action” to counter the spread of coronavirus variants.
Chinese blue chips rose 0.2%, capturing a four-week winning streak, after Friday the country reported the highest number of new COVID-19 cases in more than 10 months.
Sentiment was also recalled with further pressure in Sino-US relations after the Trump administration imposed sanctions on officials and companies for abusive allegations in the South China Sea and an investment ban on nine additional companies.
On Friday, the U.S. employment season kicks off in full swing with results from JPMorgan, Citigroup and Wells Fargo. Investors are looking to see if banks start removing credit stocks, resuming purchases, and provide guidance that shows the economy is getting better, Thomas Hayes said, chairman of Great Hill Capital in New York.
In the currency market, the US dollar rose.
The dollar index was at 90.458 against a basket of currencies, up 0.2% on the day. It was on track for a weekly gain of around 0.4%, making it the strongest week since November.
Against the stronger dollar, the euro was down 0.3% at $ 1.2121.
U.S. output rebounded as risk appetite declined. Finance 10-year benchmark notes fell 1.1107%, down from the U.S. close of 1.129% on Thursday, while 30-year yield fell to 1.8500% from 1.874%.
Oil prices, which had soared on a weak dollar and strong Chinese import data, fell when COVID-19 concerns in China hit sentiment. [O/R]
Brent crude oil futures fell 1.2%, to $ 55.71 a barrel while U.S. crude lost 0.9% to $ 53.11.
Spot gold rose 0.2% to $ 1,850.16 per ounce.
Further statement by Chibuike Oguh in New York; Edited by Lincoln Feast and Alison Williams