© Reuters. Passers-by in masks walk in front of an electronic scoreboard showing the Japanese average Nikkei index, in Tokyo
Written by Mark Jones
LONDON (Reuters) – After the downturn, this was the swing of the markets on Friday, as stocks headed in large parts of the world, the euro and the doctor all in their worst weeks since the height of the Coronavirus panic, and the dollar strengthened its best course. Since April.
Asia ended its worst week since the global meltdown in March with modest gains, and major European stock exchanges were broadly starting to stabilize, but with France and Britain now setting nearly records of new virus cases, the mood was tense.
The London Index is up 0.2% while the Frankfurt and Paris Index is down 0.2% and 0.4% leaving the European Index down by more than 3%, and travel stocks are down more than 6% for the first time since June.
There was a glimmer of hope overnight after the row between US political parties sparked talk of another sizeable stimulus package, but the rally in the dollar and demand for US and German government bonds remained.
Conversely, the drop in sentiment has hurt emerging market debt, especially poor credit-rated countries, like a wrecking ball. Newly restructured Argentine bonds lost around 25% making them the worst return on the markets since Greece in 2012.
“It has been a very interesting week,” said John Hardy, head of foreign exchange strategy at Saxo Bank. “We have seen the dollar come back, and what’s interesting this time is that there is also an element of dollar liquidity pressure in it again as well.”
He said talk of more US incentives ahead of the presidential election in November is likely to be just a “boat show,” especially with a fierce battle for a seat on the Supreme Court now thrown into the mix.
“I can’t see anyway that the Democrats can strike a deal here with this final stage in the election … It’s dirty politics all the way now.”
On Wall Street overnight, it was up 0.2%, and the S&P 500 was up 0.30% and added 0.37%.
While the US economic picture remains murky, the strongest single-family home sales in nearly 14 years in August helped revive some confidence in the recovery.
It helped push the main index up 0.6725% from Thursday’s 0.664% close. German bonds rose to -0.5% on the day as well, but they were poised for a weekly decline as the growing number of coronavirus cases in Europe increased demand for safety.
In currency markets, the dollar was hovering near its two-month high on Thursday, at 105.40 against the yen and pushed the euro to $ 1.1656 on its way to its worst week since the end of March / early April.
It also made gains after the country’s government bonds gained long-awaited entry into one of the world’s most influential bond standards, the FTSE Russell WGBI.
The strength of the dollar this week also weighed on the commodities, as gold heads into its worst week in more than a month. On Friday, it settled at $ 1,865.16 an ounce.
Copper, which has been dubbed “Dr. Cooper” in its history as a pioneer of global economic health, was poised for its worst week since the March scare with a drop of nearly 4%, while down 2% on the week but 0.8% better today at $ 42.2 per barrel.
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