Stocks run out of steam on U.S. job jitters, yen gains
A two-day equities rally lost momentum on Thursday, and investors sold riskier currencies, as stimulus negotiations dragged on in Washington and investors fretted over a likely spike in U.S. jobless claims.
MSCI’s broadest index of Asia-Pacific shares outside Japan wobbled either side of flat. Japan’s Nikkei slumped 4% and U.S. stock futures fell 1%.
The dollar climbed around 1% against the Australian and New Zealand dollars and the yen rose 0.4% against the dollar as investors sought shelter.
U.S. Federal Reserve Chairman Jerome Powell is also due to appear on NBC television around 1100 GMT.
The Fed’s promise of unlimited bond-buying has eased some of the virus-driven financial stress this week. But Powell is also likely to be asked about the real economy, and the apparent divide between health officials and President Donald Trump as to how quickly the country can return to work.
Meanwhile, as Senate leaders in the United States hoped to vote on the stimulus package late in the Washington night, markets’ patience and optimism are beginning to waver.
Hong Kong’s Hang Seng was down 0.5% by mid-morning while regional trade was mixed. Indexes in China posted meager gains and Australia, Indonesia and Thailand advanced.
The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.
Singapore’s economy suffered its biggest contraction in a decade in the first quarter, data showed on Thursday, as the coronavirus pandemic prompted the city-state to cut its full-year GDP forecast and plan for a deep recession.
Spain’s coronavirus death toll has overtaken China’s and a total of 21,221 people have died globally.
California Governor Gavin Newsom told reporters on Wednesday that a million Californians had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for even worse to come.
Citi Private Bank said the peak could reach 15-18% of the total U.S. workforce, some 25 million people.
In currencies, the mood was to duck and cover. The Australian dollar fell 1.3% to $0.5879 and the pound fell half a percent to $1.1833.
The safe-haven yen rose to 110.70 per dollar.
Oil steadied with stimulus hopes offsetting fears of plunging demand. U.S. crude futures slipped 35 cents to$24.14 per barrel and Brent crude futures fell 0.9% to $27.15.
Gold fell 1% to $1,597.91 per ounce.