Stocks fell and gold hit fresh nine year highs overnight as jitters about lockdowns affected market sentiment. Bonds rallied again, and industrial commodities were mixed, as infection rates and fatalities in the Americas soared.
The tumble defied both Chinese authorities’ efforts to push shares higher and US Federal Reserve speakers adopting a “whatever it takes” posture. Three Fed officials spoke overnight, pledging support while expressing concerns over the growth outlook for the second half of 2020. The Fed’s Atlanta president warned that the resurgence of the virus may threaten the recovery as consumers and businesses put plans on hold.
Surging infection rates in Brazil, Texas, Florida and Australia’s second most populous state, Victoria, highlight the economic risks. Already historic levels of fiscal and monetary support from governments and central banks mean the ability to enact further measures is limited.
The Australia 200 index opened slightly lower this morning, with pressure most evident on financial, IT and healthcare stocks. Nikkei futures closed the overnight session in the red, but Hang Seng futures climbed 100 points after a disappointing performance yesterday.