Global stocks fall on tech weakness, dollar gains

Signs US economy’s rebound could be stalling in absence of fiscal stimulus also weigh

NEW YORK:

A gauge of global stocks turned lower on Thursday as US markets opened and were weighed down by weakness in the technology sector, while the dollar continued its bounce from more than two-year lows

The S&P technology sector, up more than 35% on the year as the best-performing of the 11 major sectors, fell 5.52% as investors look for cheaper stocks in other areas. Signs the US economy’s rebound from coronavirus-driven lockdowns could be stalling in the absence of another round of fiscal stimulus also weighed.

While weekly initial jobless claims fell more than anticipated, the remained extremely high. In addition, the methodology used in the weekly report to address seasonal fluctuations was changed, which analysts said led to fewer claims than over the past two months.

“We’re going to struggle to put people back to work; it’s going to be another three to four years and then we have to sustain it,” said Greg Hahn, chief investment officer at Winthrop Capital Management in Indiana.

Investors will closely watch Friday’s August employment report for further signs of labour market stagnation. Other data showed growth in the services sector slowed last month, as the boost from fiscal stimulus and business reopenings faded, although it remained above the level signifying growth.

The Dow Jones Industrial Average fell 716.44 points, or 2.46%, to 28,384.06, the S&P 500 lost 116.68 points, or 3.26%, to 3,464.16 and the Nasdaq Composite dropped 580.14 points, or 4.81%, to 11,476.31. Talks on a new fiscal stimulus package remained at a stalemate, as US House Speaker Nancy Pelosi said on Tuesday that “serious differences” remain between Democrats and the White House.

European shares relinquished early gains and turned negative after rising more than 1.2% as the weakness in tech names spread, pulling them down 3.55%. The pan-European STOXX 600 index lost 1.04% and MSCI’s gauge of stocks across the globe shed 2.45%.

The dollar continued to bounce after hitting its lowest level since late April 2018 on Tuesday, while the euro continued its recent slide to dip as low as $1.1789 after climbing as high as $1.20 earlier in the week after the European Central bank expressed concerns about its rapid rise. The dollar index rose 0.338%, with the euro down 0.27% to $1.1821. Benchmark 10-year U.S. Treasury notes last rose 10/32 in price to yield 0.6185%, from 0.651% late on Wednesday.

Oil prices weakened, with both Brent and WTI crude hitting one-month lows on worries about weaker US gasoline demand and a slowdown in the economic recovery. US crude recently fell 2.36% to $40.53 per barrel and Brent was at $43.24, down 2.68% on the day.

Published in The Express Tribune, September 4^th, 2020.

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