Reuters Singapore/Washington News-Asian stocks fell on Thursday, but not as much as Wall Street’s overnight plunge. At the same time, oil prices rebounded from lows and US futures jumped as the improved economic outlook in Asia offsets investors’ new COVID-19 lock-in in Europe Worries.
This is heavy, but well below the 3.5% drop in the S&P 500 index. .SPX Or the German DAX fell 4.2% .GDAXI Leading the European stock market .STOXX It fell to its lowest level since late May.
S&P 500 futures and the Dow Jones index rebounded by 1%, and traders attribute it to increased volatility and the weakening of depression across Asia as the Chinese economy grows.
Rob Carnell, chief Asian economist at ABN AMRO ING, said: “In the second or third wave, Asia did not really play a role because its COVID has been basically controlled.”
“So the domestic economy looks reasonable. Exports will remain weak…but domestically, they are still performing well and performing better compared to (Europe and the US).”
Oil prices rose from a four-month low overnight, and the risk-sensitive Australian and New Zealand dollars rose by about a quarter.
Nevertheless, as concerns about the new lock-in measures seem to surprise investors, both currencies are currently facing weekly losses in the US dollar against the US dollar, and the euro is also facing weekly losses.
In France, in addition to buying necessities, seeking medical treatment or exercise, people must stay at home from Friday. Germany will close bars, restaurants and theaters from November 2 to 30.
Rodrigo Catril, a foreign exchange strategist at National Australia Bank, said in a report: “The market has been traveling until yesterday, hoping that improving health care services in response to the pandemic can prevent serious lockdowns.”
“At least in Europe, this dynamic has changed… The question now is whether the US states will follow suit.”
Central bank meetings and economic data were the main focus late on Thursday, and increased uncertainty about the US election on November 3 also put investors in a difficult position.
The Bank of Japan will maintain its massive stimulus plan and has vowed to take further action if the economic impact of the virus threatens deflation.
Investors expect that the European Central Bank will postpone the new measures, but hint that it will take action in December, which may put pressure on the euro.
The euro hit a 10-day low for the U.S. dollar and a 100-day low for the yen against the U.S. dollar overnight, and then rebounded slightly. The final purchase price was $1.1751.
German unemployment and inflation data, European confidence surveys and advance figures for US GDP will also be closely watched-US data may show record growth, but still keep the economy behind 2020.
Michael McCarthy, a strategist at CMC Markets in Sydney, said: “Given the current weakness, any disappointment in these numbers will have a magnifying effect on the market.”
Investors are also increasingly worried about the controversial outcome of the US election, which may trigger a wave of risky asset selling.
Wall Street’s “Fear Index”, Cboe Volatility Index .VIX It surged to its highest level since June on Wednesday, and the rise in implied currency volatility indicated that expectations would be crazy growth.
The implied volatility of the renminbi one week hit a five-year high on Thursday.
However, the US bond market is sober, and investors look back at voting day and believe that no matter who wins, the government will borrow heavily on coronavirus relief expenditures.
The benchmark U.S. 10-year Treasury bond yield rose overnight, rising by about one basis point to 0.7894% on Thursday.
Seema Shah, chief strategist at Principal Global Investors, said: “Looking ahead, the turbulence before and after the election will intensify and may even eventually subside.”
“The market will soon reiterate the trajectory determined by fundamentals rather than election news flow.”
Reporting by Tom Westbrook in Singapore and Pete Schroeder in Washington; Editing by Sam Holmes and Kim Coghill