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Global stocks came under pressure on Friday after US Treasury Secretary Steven Mnuchin called for an end to pandemic relief for troubled companies, sparking a rare showdown between the central bank and the Treasury and weighed on the trust.
FILE PHOTO: A man wearing a protective mask walks past a stock trading board outside a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan, on November 2, 2020 REUTERS / Issei Kato
REUTERS: Global stocks came under pressure on Friday after US Treasury Secretary Steven Mnuchin called for an end to pandemic relief for troubled companies, sparking a rare showdown between the central bank and the Treasury and it weighed on trust.
Asian stocks made a mixed open and S&P 500 futures fell 0.66 percent, erasing the firmer lead of a strong overnight Wall Street session.
US markets had previously rebounded after Senate Democratic Minority Leader Chuck Schumer said Republican Majority Leader Mitch McConnell agreed to reactivate talks to craft a new tax relief package.
That sentiment, however, faded after Treasury Secretary Mnuchin later asked the Federal Reserve to return money allocated under the March pandemic relief act for emergency loans to businesses, organizations. nonprofits and local governments.
That would mark the end on December 31 of most crisis response programs that the Fed deemed vital to keeping the economy stable.
“The White House wants to remove the unused portions so Congress can spend the money elsewhere, while the Fed is backing down,” said Stephen Innes, axi’s chief global market strategist. “In fact, this does not help the tug of war around the narrative of the short-term and long-term markets at a time when it is important that all levels of government, including the Fed, at least make the pretext of a unified front. “
Australia’s S & P / ASX 200 was up 0.44% in early trading, while Hong Kong’s Hang Seng Index futures were up 0.22%. Japan’s Nikkei opened 0.6% lower.
MSCI’s broader Asia-Pacific stock index outside of Japan rose 0.11%.
Investor sentiment was also tainted by data showing COVID-19 hospitalizations in the U.S. increased nearly 50 percent in the past two weeks, threatening the recovery of the world’s largest economy. as cities and states began to impose closures.
“A significant stimulus package will help small businesses, the underlying economy, as well as the unemployed and those most in need,” said Thomas Hayes, president of Great Hill Capital in New York. “And there might be less inclination to close cities.”
Nearly 79,000 people were being treated for COVID-19 infections in U.S. hospitals on Thursday, a Reuters tally showed, the most at any time during the pandemic. The surge in cases has hit investors as the United States recorded 161,607 new cases daily on a seven-day moving average through Wednesday.
The top three stock indices, however, got a healthy boost after Schumer said he had agreed with McConnell to allow his staff to start meetings for “a really good COVID relief bill.”
A senior Democratic adviser told Reuters there was a mid-afternoon meeting between congressional advisers on Thursday discussing coronavirus relief and efforts to pass a $ 1.4 trillion bill to keep government agencies in check. operating beyond December 11, when current funding expires.
Of the top 11 sectors in the S&P 500, energy and technology stocks gained the most, while utilities and healthcare were the only losers in percentage terms.
The Dow Jones Industrial Average was up 0.15%, the S&P 500 gained 0.39% and the Nasdaq Composite was up 0.87%.
US Treasury yields tumbled on the news of Mnuchin’s letter to Fed Chairman Jerome Powell, which was released after the Wall Street shutdown. The yield on the benchmark 10-year note last stood at 0.842%. US equity futures also fell 0.84% when trading resumed.
Oil prices reversed losses and rose slightly in the secondary market, after Brent fell 0.3% to $ 44.20 a barrel and US crude 0.2% lower to $ 41.70.
(Reporting by Chibuike Oguh in New York; Edited by Sam Holmes)
