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Most Asian and European markets fell Tuesday following a sharp sell-off in New York that was fuelled by fears a 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
David Kelly, at JP Morgan Asset Management, added: “A stimulus bill in the lame-duck session is urgently needed and could be supplemented by a more comprehensive measure when the new Congress meets, early in 2021.”
On Wall Street, the Dow suffered its worst day since early September, dropping more than two percent while the S&P 500 and Nasdaq also suffered sharp losses. That came after Frankfurt was hammered more than three percent, with Paris and London shedding more than one percent.
News24.com
Online Reporter