Investing.com | Sep 24, 2020 07:23
Investors seem to be giving up hope of a Congressional agreement on further economic stimulus ahead of the acrimonious US Presidential election, and this sentiment continues to weigh on markets. US contracts, including for the Dow, S&P, NASDAQ and Russell 2000 fluctuated on Thursday, rebounding from earlier lows.
Economists at Goldman Sachs slashed their US growth forecast for the fourth quarter from 6% to 3% citing concerns on the coronavirus stimulus package. Yields rose with the dollar, pushing gold even lower. Oil fell back below $40.
A slew of US central bankers warned on Wednesday of an economic slowdown and reiterated their pleas to the US Congress for further stimulus. However, the continued selloff on global stock exchanges attests to expectations that the bitter political stalemate, driven by partisanhip in the US, will not be be easily overcome in order for Democrats and Republicans to actually strike an agreement ahead of the November elections.
In additon, the situation has been exacerbated by Friday’s passing of Supreme Court Justice Ruth Bader Ginsburg and the resulting opportunity for President Donald Trump to replace her with an ideological ally.
On Wednesday, as US stocks dropped to an eight-week low and the S&P 500 Index posted its worst decline in two weeks, President Trump claimed that he could override any decision by the US Food and Drug Administration to release tougher standards for the authorization of a COVID-19 vaccine.
The FDA is currently considering new vaccine guidelines which would probably delay the approval of a vaccine until after Election Day. Trump characterized the tougher standards as a “political move.” Critics, however, accuse the President of being the one politicizing the issue.
In Europe, France has joined the UK in introducing additional social restrictions due a resurgence in the rates of COVID-19. On Thursday, the Stoxx 600 opened more than a full percent lower, following the Asian selloff.
The hourly price produced a powerful hammer, finding support by Monday lows. However, the hourly price may have completed a bearish flag, rendering any upside move as a technical return-move before the pan-European index continues lower.
A general risk-off mood in Asia was made worse by the reigniting tensions on the Korean peninsula. South Korea’s Defence Ministry accused North Korea of killing a South Korean official who went missing on Monday. China’s markets, including the Shanghai Composite fell 1.7%, while Hong Kong's Hang Seng, dipped 1.8%, underperforming on the day’s key narrative—America’s inability to launch additional stimulus amid a persistent pandemic.
On Wednesday the S&P 500 closed near the threshold of what many investors consider to be a market correction, while the NASDAQ tumbled more than 3%, led by tech giants Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN).
Yields, including for the 10-year Treasury, declined within their 2-week tight range. Treasury traders may be bracing for ever-more ferocious tweets from President Trump in the run-up to this election. His Twitter messaging ahead of previous elections had a decisive influence on rates.
The dollar edged higher, extending an advance for the fourth day.
The greenback is testing the top of both its short-term rising channel, as well as the top of falling channel since the March peak—after having completed a small bottom.
In a mirror image, gold fell for the fourth day.
The yellow metal is providing a downside breakout to a range since August, taking the price below the uptrend line since the March bottom and plotting a course for a further decline in the short to medium term.
Oil is struggling with the 200 DMA within a return move to a bearish rising wedge.
Written By: Investing.com
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