US stocks hammered on Thursday as fears of a rise in coronavirus cases and a dismal economic outlook from the US central bank forced investors to face risks that had been pushed aside during the huge market rally that has taken place since March.
Kevin Giddis, head of fixed interest rates at Raymond James, said the sale was caused by the insight among many investors that the US economy is taking longer to recover from the pandemic than expected.
“Risk markets saw a huge upswing last week with the resumption of the US economy and a better-than-expected job report,” he said. “But the timing [of the recovery] may not be as optimistic as the markets first thought. “
Jeffrey Halley, senior market analyst for Asia Pacific in Oanda, said US markets are likely to continue to set the tone for global equities. “All eyes will be on the United States … and if the correction continues or is forgotten as quickly as it began,” he wrote in a research report. “A sensible case can be designed for either outcome and a wait-and-see strategy is the best.”
Oil markets were also lower on Friday after US crude prices crashed by 8% on Thursday – likely a response to fears of detection of infections in the world’s largest oil-consuming economy, according to Stephen Innes, head of global markets at AxiCorp. Any new shutdowns to contain the virus would lower energy requirements again.
US oil fell briefly more than 5% early in Asia, although futures recovered and traded most recently at 3.4% to $ 35.09 a barrel. Brent, the global benchmark, fell 3% to $ 37.40 a barrel, extending Thursday’s steep declines.
– Anneken Tappe and Tami Luhby contributed to this report.