Fears of a second coVID-19 outbreak played a major role on Thursday, with us stocks suffering a “black Thursday” and the Dow plunging more than 1,800 points. The price of WTI crude tumbled more than 8 per cent on Thursday amid wild selling on fears that a rise in COVID-19 infections would slow demand growth. As stocks tumbled, so did gold, which fell more than $10 Thursday. Shares across the region fell in early Asian trading on Friday and WTI oil prices fell another more than 5 per cent. On the global front, the cumulative number of confirmed cases of COVID-19 globally has exceeded 7.58 million, with nearly 2.09 million confirmed cases in the United States.
The Dow plunged more than 1,800 points amid fears of a second outbreak
U.S. stocks tumbled on Thursday as investors worried about a second coVID-19 outbreak in the United States and the fed’s gloomy economic outlook weighed on the market.
The number of hospital admissions in Texas rose to a record high for the third straight day on Wednesday, raising fears of a second wave of cases. Texas is one of the states implementing the first phase of its reopening.
All three major U.S. stock indexes fell more than 5 percent, their biggest percentage declines since March 16. The NASDAQ ended three days of record closing highs. On March 16, the stock market collapsed after an economic blockade was suddenly imposed to contain the outbreak.
The Dow Jones industrial Average fell 1861.82 points, or 6.9 percent, to 25128.17. The S&P 500 fell 188.04 points, or 5.89 percent, to 3002.1. The Nasdaq composite index closed down 527.62 points, or 5.27 percent, at 9,492.73.
The CBOE Volatility Index VIX.VIX, known as a “fear gauge,” posted its biggest one-day gain since March 16.
Big tech stocks fell across the board, with apple down 4.8%, amazon down 3.38%, Netflix down 2.05%, Google down 4.29%, Facebook down 5.24% and Microsoft down 5.37%. Airline, financial and energy stocks also fell.
“There are really no buying points, it’s almost been a selloff,” said Paul Nolte, portfolio manager at Kingsview Asset Management.
Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, agreed. “Everything is being sold,” Ghriskey added. “People are worried that the stock market has peaked.”
“The psychology of the market is being re-tested today,” said Dan Deming, managing director at KKM Financial, as traders weighed the recent rise in covid-19 hospitalisation and the Fed’s downbeat outlook for the economy.
After the Fed released its first pandemic economic outlook at the end of its two-day monetary policy meeting On Wednesday, Chairman Colin Powell warned that the recovery was still a long way off.
Joseph Sroka, chief investment officer at NovaPoint, said: “The Fed holding rates steady through 2022 could give investors the impression that the Fed may be more concerned about the pace of the economic recovery than initially expected.”
Scott Minerd, chief investment officer at Guggenheim Investments, commented: “The market could test the March lows and the S&P 500 could fall to 1600.”
Dennis DeBusschere, macro research analyst at Evercore ISI, said in a note that the Fed’s loose monetary policy will not offset a second severe recession. The risks of continued economic weakness and earnings growth have increased as new cases and hospital admissions rise and investors worry that the recent protests will trigger a wave of infections.”
South Korea’s KOSPI index fell more than 4 percent and Japan’s Nikkei 225 fell 3 percent in early Asian trading On Friday. Australia’s ASX200 index fell nearly 3 percent.
Oil prices also sold off
Oil prices also sold off furiously on Thursday on fears that a rise in COVID-19 infections would slow demand growth for crude.
U.S. WTI crude for July fell $3.26, or 8.2 percent, to $36.34 a barrel, its biggest one-day drop since April. Brent crude for August delivery fell $3.18, or 7.7 percent, to $38.55 a barrel.
With some US states at risk of a second wave, prospects for a genuine recovery in oil demand remain elusive. Thomas Finlon, head of Energy Analytics Group, said relatively bearish comments from the Federal Reserve on Wednesday, combined with fears of a resurgence of the disease, contributed to Thursday’s weakness.
“The recent spike in oil prices has prompted producers to restart some of their shutdowns, which has actually reversed the positive impact on prices slightly,” said Paola Rodriguez Masiu, senior oil market analyst at Rystad Energy. “How oil prices develop further will depend to a large extent on how far and how fast production resumes after the shutdown,” she added.
Cailin Birch, economist for Global Economics, notes: “The global economy remains in a state of flux. The drop in oil prices in recent days may well reflect the end of the initial price rise as the economy reopened. “The global economy is currently undergoing a long and slow recovery and we expect to see a turnaround by the end of 2021, provided that the novel Coronavirus vaccine can be produced by then.”
WTI crude futures fell another 5 percent to $34.52 a barrel in early Asian trading on Friday.
The dollar is a haven
The safe-haven U.S. dollar rose on Thursday as expectations of a quick global recovery from the coronavirus outbreak waned. The dollar index.DXY closed up 0.7% at 96.77 on Thursday after hitting an intraday high of 96.84.
“There are a lot of new infections out there and Investors seem to be getting a little spooked so almost everyone is hedging their bets, they’re basically selling everything except the dollar and natural gas,” said Michael Matousek, chief trader at U.S. Global Investors in New York.
Since the end of May, the dollar has fallen 3.5 per cent against a basket of currencies as better-than-expected economic data have reopened US economies and states.
Spot gold fell Thursday as the dollar strengthened, while tumbling U.S. stocks also dragged gold lower.
Gold is considered a safe store of value in times of political and financial uncertainty, but lately it has sometimes moved in lockstep with stocks, especially when heavy selling in the broader market forces investors to sell precious metals to meet margin requirements and cover losses. Stocks tumbled in March, as did gold.
There are fears of a second outbreak in the US
While the world is slowly restarting its economy, fears of a second wave are growing as the number of confirmed cases in US states skyrocket. It took nearly three months to reach a million confirmed cases in the United States, but only six weeks to double the number of confirmed cases.
According to the latest statistics, the cumulative number of confirmed cases of COVID-19 globally has exceeded 7.58 million. More than 200,000 people have been diagnosed in eight countries, including Brazil, Russia, India, the United Kingdom, Spain, Italy and Peru. The cumulative number of confirmed cases in the United States has reached nearly 2.09 million.
According to world real-time statistics, as of 8:33 am, June 12, Beijing time, the total number of confirmed cases of COVID-19 worldwide has exceeded 7.58 million, reaching 7,583,868, and the total number of deaths has exceeded 423,000, reaching 423,081. The United States has the world’s highest number of confirmed cases of COVID-19, with nearly 2.09 million cases to 2,089,661, and more than 116,000 deaths to 116,029.
Protests over the death of an African-American man, George Floyd, by a white police officer in Minnesota have spread across the US for days, with riots and violent clashes. American health experts have repeatedly warned that mass demonstrations during an epidemic could create potentially clustered cases.
Richard Ellison, an epidemiologist in the United States, said protests in the United States are now so large and so close that if people with the virus are present, others risk being infected even outdoors.
According to media reports, 21 states now have a rise in new confirmed cases, with a surge in at least nine. Arizona’s death toll rose by 30 percent. Texas has seen a 70% increase in confirmed cases.
The number of DEATHS from COVID-19 in the United States could double to 200,000 by September, predicts John Jha, director of Harvard University’s Global Health Institute.
“I think there are still a lot of Americans who are not ready for home quarantine and I understand that,” Jha told CNN on June 10. Some people may be planning to live with the virus for a long time, but that would mean 800 to 1,000 Americans dying every day, and 100,000 more dying from COVID-19 by September.”
New York Governor Andrew Cuomo said at a regular news conference Thursday that 21 STATES have seen a rebound in confirmed cases, with 14 reaching new highs. New York state is doing well, but New York is the latest to start the first phase of the resumption of work, there is uncertainty.
Despite the ongoing COVID-19 outbreak in the US, US President Donald Trump announced on June 10 that he will hold his first campaign rally since early March in Tulsa, Oklahoma, on June 19 and rallies in four other states in the coming weeks.
All major rallies in the US have been suspended since March 2, and Mr Trump has been unable to hold a campaign rally. His campaign had planned to resume rallies starting in July, but as more states began reopening their economies and the nationwide protests that followed The death of George Floyd, the decision was made to organize early.
According to data obtained by Yahoo News from the CENTERS for Disease Control and Prevention (CDC), one-day cases in the United States rose 36.5 percent in recent days as street protests and state restarts continued.
“The worst is yet to come,” said Joe Gerald, a public health researcher at the University of Arizona, according to the Washington Post. There is a lot of evidence that community transmission is increasing.”