Most Asian markets fell Tuesday following a sharp sell-off in New York and Europe that was fuelled by fears coronavirus resurgence will force fresh economically painful containment measures.
Traders have also given up almost any hope for a new US stimulus package being passed before next Tuesday’s election, with Democrats and Republicans blaming each other, though there are still expectations a new deal will be agreed afterwards.
The need for a big-spending rescue for hard-hit Americans is being highlighted by a big jump in new infections across the country that observers fear will deal a blow to an already shaky economic recovery. Data this week is expected to show record US growth in the third quarter thanks to a multi-trillion-dollar stimulus agreed earlier this year alongside huge Federal Reserve support.
However, that follows a record contraction in the second quarter, while economists have tipped the economy to shrink this year.
“The second and third wave spread of Covid-19 is possibly triggering a point of no return for some industries as the economic damage borders on irreversible,” said Axi strategist Stephen Innes. “The Covid-19 induced downward spiral continues accelerating.”
With an eye on next week’s vote, he added, “We should expect price action to remain choppy in the days ahead, with investors very reluctant to put on any significant risk ahead of what promises to be a headline heavy week or two.”
On Wall Street, the Dow suffered its worst day since early September, dropping more than 2% while the S&P 500 and Nasdaq also suffered sharp losses. That came after Frankfurt was hammered more than 3%, with Paris and London shedding more than 1%.
And the selling continued in Asia, though the retreat was not as painful.
Published in The Express Tribune, October 28th, 2020.
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