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SYDNEY (Reuters) – Global financial markets stalled on Friday as news of the US Treasury ending emergency lending programs struck a blow to hopes of an economic recovery as California announced curfews in an attempt to fight the surge in coronavirus infections.
S & P500 futures slipped 0.5% while Dow futures fell 0.6%, canceling out a firmer lead from a strong Wall Street session overnight.
The dollar was slightly weaker and the 10-year Treasury yield slipped to a 10-day low at 0.818%.
Eurostoxx futures started almost flat while FTSE London futures were up 0.25%
In Asia, Japan’s Nikkei stumbled 0.5% while Australian stocks were flat. Chinese stocks were little changed while South Korea’s KOSPI index was a little firmer.
That left the largest MSCI index of Asia-Pacific ex-Japan stocks up 0.3%. It is up 1.5% so far this week.
In a letter to U.S. Federal Reserve Chairman Jerome Powell, U.S. Treasury Secretary Steven Mnuchin said the $ 455 billion allocated to the Treasury under the CARES Act should be in place of Congress for reallocation.
“This rift between the Treasury and the Fed risks undermining the unwavering confidence that investors place in continued political support to help the economy weather the pandemic,” Singapore-based DBS wrote in a note.
Although the programs were not widely used, Fed officials felt their presence reassured financial markets and investors that credit would remain available to help businesses, local agencies and even organizations to recover. nonprofit to weather the pandemic crisis.
Mnuchin’s move added to market concern over broader economic growth, as data shows the rapid and rapid recovery from a historic plunge in the U.S. economy is fading, with more than 10 million people who had a job in January still without work.
“The Fed has been one of the only sources of stability in Washington and removing its latitude to offer support in a fragile recovery is just absurd,” said Isaac Boltansky, director of policy research at Compass Point Research & Trading, based in Washington.
“This is a worrying development which is injecting uncertainty and instability into the markets in completely unnecessary ways. How many times will Washington stumble on its shoals in response to this crisis? “
Investor sentiment has also been hit by data showing COVID-19 hospitalizations across the United States have jumped nearly 50% in the past two weeks, threatening the recovery of the world’s largest economy. as cities and states began to impose lockdowns.
California on Thursday imposed a curfew on social gatherings and other non-essential activities in one of the most intrusive restrictions ordered across the country to curb an alarming rise in infections.
The three major U.S. stock indexes, however, received a good boost overnight after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell agreed to revive the talks to develop a new tax relief plan.
A senior Democratic official told Reuters there was a mid-afternoon meeting Thursday between congressional aides who discussed coronavirus relief and efforts to pass a 1.4 trillion bill. dollars to keep government agencies in business beyond December 11, when current funding expires.
The Dow Jones rose 0.15%, the S&P 500 0.39% and the Nasdaq 0.87%.
In currencies, the dollar index was last at 92.232, approaching Thursday’s low of 92.236.
The euro rose to $ 1.1881 while the yen weakened to 103.8 per dollar. The Australian dollar gained 0.2% to $ 0.7294.
In commodities, oil prices stabilized after losses the day before, when concerns over coronavirus lockdowns affecting fuel demand weighed on the market.
West Texas Intermediate held steady at $ 41.74 per barrel. Brent rose 10 cents to $ 44.30.
Gold was stable with spot prices at 1,867.3 an ounce.
Reporting by Swati Pandey in Sydney; Additional reporting by Chibuike Oguh in New York; Edited by Kenneth Maxwell and Lincoln Feast.
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