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Stocks gains curbed by end of Fed stimulus, virus concerns

Published 11/19/2020, 08:01 PM
Updated 11/20/2020, 10:11 AM
© Reuters. FILE PHOTO: A man wearing a protective face mask walks past  a stock quotation board outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

© Reuters. FILE PHOTO: A man wearing a protective face mask walks past a stock quotation board outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

By Tom Arnold

LONDON (Reuters) - World stocks edged higher Friday, but gains were capped by dwindling stimulus in the United States and concerns about the damage to the global economy from further COVID-19 infections.

Hopes of a stimulus-led recovery receded after U.S. Treasury Secretary Steven Mnuchin said key COVID-19 pandemic lending programs at the Federal Reserve to support businesses and local governments would expire by the end of 2020.

Meanwhile, flare-ups in coronavirus cases dampened sentiment, with California announcing fresh curfews to try to fight surging infections, while Japan faces a third wave of the virus, and parts of Europe are already under recently renewed restrictions.

The World Trade Organization said that while global trade in goods had rebounded in the third quarter from lockdowns, there would be a slowdown at the end of 2020.

Europe's STOXX 600 edged 0.4% higher, while the global stocks index was also 0.2% firmer and on course for its third weekly gain in a row.

S&P500 futures were flat, while Dow futures fell 0.1%, cancelling out a firmer lead from a strong Wall Street session overnight.

The dollar edged up before reversing later and the 10-year Treasury yield slipped to the lowest in 10 days at 0.818%, before stabilizing in later trading.

Benchmark German 10-year Bund yields fell to a nine-day low < US10DE10=RR>.

In Asia, Japan's Nikkei stumbled 0.4%, weighed down by a rise in new domestic coronavirus infections to record highs. Chinese shares were 0.3% stronger.

In a letter to U.S. Federal Reserve Chair Jerome Powell, Mnuchin said $455 billion allocated to Treasury under the CARES Act should be instead available for Congress to reallocate.

Although not used extensively, Fed officials felt the programs reassured financial markets and investors that credit would remain available to help businesses, local agencies and even non-profits through the pandemic.

Mnuchin's decision added to market anxiety about broader economic growth as data shows the early fast recovery from a historic plunge in the U.S. economy is fading, with more than 10 million who had jobs in January still out of work.

"The fact the market is able to resist to this extent means there is some sun ahead, driven by the fact that in the medium term economic activity will accelerate and there is positive news on the vaccine," François Savary, chief investment officer at Swiss wealth manager Prime Partners, said.

Investor sentiment was also hit by data that showed COVID-19 hospitalizations across the United States jumped by nearly 50% in the last two weeks, threatening the recovery of the world's largest economy as cities and states imposed lockdowns.

All three major U.S. stock indexes, however, got a boost overnight after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell had agreed to revive talks to craft a new fiscal relief package.

In Europe, investors clung to signs of progress on coronavirus vaccines.

The European Union could pay more than $10 billion to secure hundreds of millions of doses of the vaccine candidates being developed by Pfizer-BioNTech and CureVac, an EU official involved in the talks told Reuters.

In currencies, the dollar index was at 92.20, broadly flat on the day after it slipped overnight then picked up again as European markets opened. [L1N2I60G8]

The euro was flat against the dollar, at $1.18705, on track for a small weekly gain, while the Australian dollar is having its best month versus the U.S. dollar since April, in terms of percentage change.

The New Zealand dollar rose to a new two-year high against the U.S. dollar.

In commodities, oil prices steadied after losses the previous day, when concerns about coronavirus lockdowns affecting fuel demand weighed on the market. [O/R]

The U.S. West Texas Intermediate (WTI) January crude contract added 0.5% to $42.09 a barrel. Brent crude was up 0.7% at $44.51.

© Reuters. FILE PHOTO: A man wearing a protective face mask walks past  a stock quotation board outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo

Gold fell 0.1% to $1,866.19 per ounce.

Latest comments

Here’s a direct lift from a story about Rudy’s failure on 9/11: “The International Association of Fire Fighters (IAFF) released a video Wednesday evening portraying what the union characterizes as leadership “failures” allegedly committed by Giuliani before, during and after the 9/11 attack that claimed the lives of 343 firefighters.”
Treasury ending the support programs is retribution for lost election and obstructing the Fed and the new administration to get economic recovery quickly History will not blame them.
instead stimulus will be passed before 2021 no one messes with the Fed .
republicans are to blame for supporting a cult leader from ********
Coved19 vaccine is compelled....Next 33000+++
Unplug when the balloned market needed to cool down a bit. No one thinks the stimulus would be a done deal by the end of 2020
What type plugs are they pulling this time? Booty plug, plug&amp;snug or spark plug lol
jajajajaja &quot;All three major U.S. stock indexes, however, got a HEALTHY boost overnight&quot;
Tomorrow SP500 red or green?
Likely Blue
Can Trump run for President from Prison?
trump thinks he coming back in 2024 now that he is tanking the economy
Taking away the CareAct idle money should not have caused Dow future to down 200 points, especially bipartisan stimulus relief talk still in process, the market is crazy sensitive to an extent people acting like a mentally ret***d like Biden!
trump has time to crush the markets, Biden is not to blame for this too big-to-burst-bubble
So why did the democrats not agree to the $1.8t package and then once they in power added their muscle/ promise with the rest? Politicians dont care about the average person
that was a crazy rotation out of tech and then back in. any thoughts on a tech bull run through the holidays or is it time to take profits and wait for a pullback
get ready for a squeeze
Trump's scorched earth policy for two months. Announcing that he's a goner.
Uhmm... today is Thursday, not Friday. And yesterday was Wednesday, not Thursday...
Yeah... I usually overlook that part of the article. I also assumed it was written with U.S.A. as its intended audience. Thanks, and yes I know what happens when you assume 😁
Just seen and article by the same guy saying Beijing instead of Sydney. Investing.com says one was published an hour ago, the other two. The date and time for the article show a 35 minutes difference. I always figured Investing.com rounded that stuff, but either way you look at it I dont think it fits the &quot;he is in that city&quot; hypothesis. Does anybody else have some input that could help piece the picture togeather? Thanks for your input guys.
Nevermind... :×
Without stimulus, there is no money to spend on Main Street economy. Hence, there’s no revenue for Wall Street companies.....stock values will drop.
red in Asia means stocks are going up, you can plus signs on that picture.
you can see plus signs
without stimulus the markets can lose some gains from stimulus hope
stimulus hopes dashed for now. virus fears and vaccine hopes still alive. everyone still ignoring the upcoming tax hikes and the damage they will do to our economy.
Vaccine hopes dwindling. Everyone knows vaccine was only used to pump market. Virus mutates like flu. Vaccine only announced to pump market. Dems want bailout money. Thats why Cuomo and western states pact said they were skeptical of it. Another political hoax in their toolbox.
Quite a pair. Short much
That's it for the goodies from Uncle Trump for the Robinhood bulls. Virus good news already priced in.
Haha.. I told you this was wrong all along.. it took him so long to realize!!! Surprising how such people rule nations.
yet nothing you said is found to be correct; what are you saying other than ha! this was wrong!
Pouring all my money into EV stocks. if I die , I die🏎
electric vehicles
which one...Nio, Li, Xpeng? lol
agreed. That would be cherry on top.
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