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Stocks Head Lower as Coronavirus Fears Dominate
07/13/2020 9:06 am EST
Concern over U.S. spike in Covis-19 cases is pushing traders out of stocks and into the S.S. dollar, reports Fiona Cincotta.
A mixed close on Wall Street saw the Dow Jones and S&P 500 indexes close in the red, while the technology-focused Nasdaq 100 surged to yet another record high. Traders are increasingly seeking the refuge from the Coronavirus crisis in tech giants. Increased flows into the likes of Amazon (AMZN), Alphabet (GOOGL) and Apple (AAPL) come at a time when the chances of a V-shaped recovery look minimal and fears of rising Coronavirus cases and a second lockdown are dominating.
Away from tech, stocks on Wall Street were under pressure as U.S. Covid-19 cases hit a new record of 60,000 a day, raising fears that the surging numbers could undermine the fragile economy. The negativity spilled into Asia; where even Chinese stocks declined for the first time since June 29. European bourses are pointing to a lower open in what is gearing up to be a risk off session.
U.S. Dollar Rises On Safe-Haven Flows
Riskier assets such as equities are out of favor, as are riskier currencies. Meanwhile the safe-haven U.S. Dollar is gaining ground. The dollar jumped following jobless claims data in the previous session, which showed that while initial claims were at a four-month low, the total number of people claiming unemployment benefits rose to 32.9 million stoking fears over economic health.
While the dollar is surging, gold is keeping the inverse relationship with the greenback alive, slipping lower for a second straight session after rallying to $1,816 earlier in the week, its highest level since 2011.
Oil Extends Losses
Crude oil is also trading on the back foot, extending losses from Thursday, amid fears a return to lockdown as U.S. Coronavirus infections reach a new daily record could dent demand. US crude fell 3.1% and through the key support at $40 on Thursday. WTI is adding to those losses down a further 1.5% on Friday (see chart).
The recent hit to demand from April’s lockdown is still very fresh in traders’ minds. Fears of a repeat, with a second lockdown are seeing traders sell out of oil bloated inventories are also acting as a drag. With little in the way of high impacting data, it seems unlikely that traders will find reason to bid up oil heading into the weekend.
Fiona Cincotta is a Market Analyst for Currency Live
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