Global stocks lower after US senate approves virus aid deal
Global stock markets and US futures have declined after the US senate approved a proposed 2.2 trillion dollar (£1.85 trillion) coronavirus aid package.
Frankfurt opened down more than 2% while Tokyo lost 4.5%. Shanghai and Hong Kong also declined.
On Wall Street, the future for the benchmark S&P 500 index lost 1.6% after US senators approved aid to blunt the impact of business shutdowns due to the coronavirus that has killed more than 21,000 people worldwide. The measure goes to the US house of representatives, which is expected to approve it on Friday.
Stephen Innes of AxiCorp said: “Investors now have to judge whether tremendous policy support is sufficient to meet worsening economic conditions.”
The future for the Dow Jones Industrial Average was 1.3% lower ahead of government report on Thursday that forecasters expect to show a record number of Americans filed for unemployment benefits following a wave of layoffs.
The S&P 500 rose 1.2% on Wednesday but is down nearly 27% from its peak a month ago.
The US senate vote was delayed by arguments over whether the measure does too much or too little for companies, workers and healthcare systems. Forecasters say a recession looks increasingly inevitable.
In early trading, Frankfurt’s DAX shed 1.8% to 9,699.19, while the CAC 40 in France retreated 2.3% to 4,330.67.
In Asia, the Nikkei 225 in Tokyo declined to 18,664.60 while Hong Kong’s Hang Seng shed 0.7% to 23,352.34. The Shanghai Composite Index declined 0.6% to 2,764.91.
The Kospi in Seoul lost 1.1% to 1,686.24 while Sydney’s S&P-ASX 200 added 2.3% to 5,113.30.
India’s Sensex gained 3% to 29,407.25 and New Zealand gained 4%. Jakarta rose 10.2% and other south-east Asian markets also advanced.
Singapore’s benchmark lost 1% after a government forecast the economy will shrink 10.6% in the current quarter compared with the three months ending in December.
Singapore is preparing its second stimulus package as more businesses are told close and controls on public activity are tightened.
Global stock prices have swung wildly as business shutdowns spread around the world. Investors say they need to see a decline in numbers of new coronavirus infections before prices can bottom out.
Many traders have “reverted to the 2008 case study”, when markets saw several 5% rallies during the global financial crisis before bottoming out in March 2009, Chris Weston of Pepperstone said.
Investors are waiting to see the details of Washington’s aid plan. It includes direct payments to most Americans and help for hard-hit industries.