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SYDNEY: Oil prices hit five-month lows and stocks extended losses on Monday on concerns about global demand as many economies fell back into coronavirus-induced lockdowns while the upcoming US presidential election .
Risk appetite has been affected in the last week due to rising coronavirus cases and lockdowns, fears of the prospect of a highly controversial US presidential election, the absence of US fiscal stimulus ahead of the elections, and gloomy corporate perspectives.
Global coronavirus cases topped 500,000 last week and Europe crossed the grim milestone of 10 million total infections. The UK is dealing with more than 20,000 new cases a day, while a record increase in cases in the US is killing up to 1,000 people a day.
The new locks induced by the coronavirus have raised concerns about the outlook for fuel consumption, which has pushed Brent crude to a low of $ 35.74 a barrel, a level not seen since the end of May. US crude fell to $ 33.64.
The disappointing outlook and results from some of Wall Street’s biggest companies last week, including Apple and Facebook, further soured spirits and dragged US stocks lower last week.
On Monday, MSCI’s broader Asia-Pacific equity index outside of Japan hovered near a month-long lows at 569.86, down 0.1%.
Japan’s Nikkei was up 0.6%.
Australian stocks fell 0.1% while New Zealand’s benchmark index lost 0.6%.
“It’s going to be a great week with Tuesday’s US elections as the main event,” said AMP economist Shane Oliver.
“The US elections have tightened even more in the last week, making it difficult to call,” Oliver added.
“The adjustment is likely weighing on stocks, as it carries a higher risk of contested elections and less chance of substantial post-election fiscal stimulus as a blue wave that sees Democrats win the presidency, control of the Senate and House of Representatives may be somewhat less likely. “
Ahead of last campaign weekend, Republican President Donald Trump is lagging behind Democratic challenger Joe Biden in national opinion polls in part because of widespread disapproval of Trump’s handling of the coronavirus.
Opinion polls in the most competitive states that will decide the election have shown a closer race, still favoring Biden.
In currencies, the risk-sensitive Australian dollar fell 0.4% to below 70 cents for the first time since July. The last time it was $ 0.7007.
The Japanese yen strengthened slightly at 104.57 to the dollar, while the British pound was slightly weaker at $ 1.2927. The euro was down 0.1% to $ 1.1639.
That left the dollar index, which measures the dollar against a basket of pairs, up 0.08%.
However, a risky revival after the US elections could see the dollar resume its slide from March highs, analysts said.
Analysts at JPMorgan said the market likely views a Biden win as “neutral in the short term” but “negative in the long term” as his expected fiscal policy outweighs the benefits of a large stimulus package.
“SPX may have a ~ 3400 lead, but it would have a greater disadvantage depending on the package details, potentially ~ 2500,” they added.
On Friday, the S&P 500 lost 1.21% to close at 3,269.96. The Nasdaq Composite fell 2.45% while the Dow Jones fell 0.6%.
– Reuters
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