Continental shares tumbled overnight as France, Italy, Belgium and the Netherlands closed their borders with the UK. The re-institution of lockdown measures for London and the discovery of a new strain of virus triggered the action. Growth exposed markets fell with investor sentiment, although the passage of a stimulus bill late in the session lifted US indices off their lows.
The new wave of infections and the closure of the UK port at Dover spooked forex traders. The British pound fell more than 2 big figures. However an offer by the British PM to extend talks on a trade deal eased concerns, and the pound retraced. Share investors were less impressed, and the UK 100 index finished down almost 2%, and nearer its session lows.
In the US, Democrats and Republicans finally reached agreement and passed a US $900 billion stimulus bill. The much delayed bill is significantly smaller than initial amounts proposed more than 2 months ago. The S&P 500 index staged a recovery from early lows, but all major indices finished in the red.
The deterioration in sentiment hit commodity markets. Copper, crude oil and aluminium dropped 1.5% to 3%. The exception was iron ore, which added to recent gains and is now approaching all-time highs. The outperformance of the key steel making ingredient saw the Australian dollar extend recent gains against the New Zealand dollar. The US dollar surged then fell, leaving many currencies close to unchanged, although cryptocurrencies came under broad pressure.
Futures point to a rough start for Asia Pacific stocks this morning. Australian retail sales are to forecast to have grown at 2.0% in November, up from October’s 1.4%. However the re-introduction of lockdown measure in Australia’s richest and most populous city, Sydney, could see investors focus on the negative.