Left Menu
Development News Edition

Stocks sink after US, Germany report record economic drops

Global markets and US stock futures fell Thursday after the Federal Reserve warned the coronavirus pandemic might threaten the modest economic recovery and kept interest rates near zero. The drop in stocks accelerated in Europe after Germany said its economy shrank by 10% in the second quarter from the previous three-month period.

PTI | Newyork | Updated: 30-07-2020 20:19 IST | Created: 30-07-2020 20:10 IST
Stocks sink after US, Germany report record economic drops
Representative Image Image Credit: Pixabay

Stocks are falling in early trading on Wall Street Thursday after the US and Germany reported record contractions in their economies in the second quarter as the coronavirus pandemic led to widespread shutdowns. Markets sank further after President Donald Trump suggested that he might seek to delay the presidential election, although the election date is set by Congress. The S&P 500 fell 1%, and European markets posted larger losses. The US economy shrank at a 32.9% annual rate in the April-June period, its worst quarter in history by far. Also, another 1.4 million laid-off Americans applied for unemployment benefits last week. Global markets and US stock futures fell Thursday after the Federal Reserve warned the coronavirus pandemic might threaten the modest economic recovery and kept interest rates near zero.

The drop in stocks accelerated in Europe after Germany said its economy shrank by 10% in the second quarter from the previous three-month period. US GDP data is due later Thursday, while the Europe-wide figures will be released Friday. Lower interest rates and investor optimism about a possible coronavirus vaccine have helped global markets recover most of this year's losses. But analysts say it might be too early to bet the recovery will persist, given the rising infection numbers in the United States, Brazil and other countries.

On Wednesday, Fed Chairman Jerome Powell warned that rising US cases, which have led some state governments to reimpose anti-disease measures, threaten the modest recovery from the pandemic. The Fed said it would keep buying $120 billion of Treasury and mortgage bonds every month to encourage borrowing and spending, but Powell said Congress needs to take action.

Legislators have yet to agree on aid after $600 in weekly unemployment benefits for millions of Americans run out this week. "The current situation is all about money in consumer pockets, which is precisely why fiscal policy is so much more important," Stephen Innes of AxiTrader Corp. said in a report.

In Europe, Frankfurt's DAX retreated 2.4% to 12,511 after the GDP figures came in below expectations. Economists note that the second quarter was the economic low point and recent data has shown a relatively strong bounce back since then. Still, the second quarter drop was the sharpest on record for Germany, Europe's largest economy, and suggests the eurozone figures due Friday could also be worse than predicted. The CAC 40 stock index in France declined 1.2% to 4,900, and the FTSE 100 in London lost 1.6% to 6,036.

On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were both 0.8% lower. In Asia, the Shanghai Composite Index lost 0.2% to 3,286.82 and the Nikkei 225 in Tokyo gave up 0.3% to 22,339.23.

The Hang Seng in Hong Kong tumbled .07% to 24,710.59 after data Wednesday showed the territory's economy shrank by 9% in the quarter ending in June. The Kospi in Seoul advanced 0.2% to 2,267.01 and Sydney's S&P-ASX 200 added 0.7% to 6,051.10. India's Sensex shed 0.6% to 37,847.47.

Also Thursday, Japan reported retail sales rose by a better-than-forecast 13.1% in June over the previous month. That means retail sales in one of the world's biggest markets were only 0.9% lower than in February before the crisis hit, Tom Learmouth of Capital Economics said in a report.

In the United States, some companies are reporting quarterly results that exceed forecasts, though they still are well below pre-virus levels. On Wednesday, Advanced Micro Devices rose 12.5% after it reported stronger profit than Wall Street expected. Starbucks gained 3.7% after it reported a loss that wasn't as bad as analysts were expecting. In Europe, Airbus shares were up after it said it had acted aggressively to support cash flow.


TRENDING

OPINION / BLOG / INTERVIEW

Post-COVID-19 Nigeria needs a robust Health Management Information System to handle high disease burden

Nigeria is among a few countries that conceptualised a health management information system HMIS in the early 90s but implementation has been a challenge till date. Besides COVID-19, the country has a huge burden of communicable and non-com...

Morocco COVID-19 response: A fragile health system and the deteriorating situation

Learning from its European neighbors, Morocco imposed drastic measures from the initial stages of the COVID-19 outbreak to try to contain its spread. The strategy worked for a few months but the cases have surged after mid-June. In this sit...

COVID-19: Argentina’s health system inefficiencies exaggerate flaws of health information system

You can recover from a drop in the GDP, but you cant recover from death, was the straightforward mindset of Argentinas President Alberto Fernndez and defined the countrys response to COVID-19. The South American nation imposed a strict...

Rwanda’s COVID-19 response commendable but health information system needs improvement

Rwanda is consistently working to improve its health information system from many years. However, it is primarily dependent on the collection and reporting of health data on a monthly basis. Besides, evaluation studies on Rwandas HIS publis...

Videos

Latest News

Israel becomes new obstacle for Sudan in quest to leave US terrorism list

Despite over a year of negotiations, Sudan is facing a fresh obstacle to its removal from a U.S. terrorism list that has hindered its economy a demand that it normalize relations with Israel, three sources familiar with the matter said. How...

TikTok says it didn't take part in Australia security probes

TikTok executives told a Senate committee on Friday that they lobbied Australian lawmakers but did not engage with investigators before the government concluded that the video-sharing app did not pose a security threat. The executives were ...

Flipkart, Amazon strengthen furniture offerings ahead of festive season

E-commerce giants Flipkart and Amazon have expanded the number of sellers on their platforms and ramped up selection in the furniture category as they gear up to compete in the upcoming festive season. Walmart-owned Flipkart said it has mor...

Condition of Delhi Dy CM Sisodia better now: Official

The condition of Delhi Deputy Chief Minister Manish Sisodia, who is battling a double infection of COVID-19 and dengue, is better now, an official from his office said on Friday. Sisodia is undergoing treatment at Max Hospital, Saket, where...

Give Feedback