Stocks Slide As US Jobless Data Fuel Economy Concerns

Traders work on the floor of the New York Stock Exchange (NYSE) the morning after U.S. President Donald Trump was impeached by the House of Representatives on December 19, 2019 in New York City. Despite the events in Washington, markets were up sharply in morning trading. Spencer Platt/Getty Images/AFP

Traders work on the floor of the New York Stock Exchange (NYSE). Spencer Platt/Getty Images/AFP.

Stock markets slid Thursday as worse-than-expected US jobless data stoked concern about the outlook for the world’s biggest economy.

The dollar fell against the euro in response to the news that just over 1.1 million people filed new claims for jobless benefits last week, a steeper rise than anticipated.

Stock prices, already in the red earlier in the session, continued lower as a result, pulled down by early losses on Wall Street.

Already on Wednesday, a sobering Federal Reserve assessment of the US economic outlook had soured sentiment on stock markets across the globe.

“The fallout from the Fed minutes continues across markets, with European indices in the red and US futures pointing to a weaker open after days of gains,” noted Chris Beauchamp, analyst at IG trading group.

With the coronavirus continuing to ravage the country and containment measures keeping businesses closed, minutes from the Fed’s July meeting showed it was concerned about the recovery, as help for small businesses, extra money for the jobless and direct payments to all Americans come to an end.

Federal Reserve chief Jerome Powell has led repeated calls for more government support for the economy.

The “minutes are casting a shadow over markets and underline that any recovery is not going to be a straight line of advances”, said Neil Wilson of Markets.com.

“The Fed layered on the risks and caution thick, but didn’t come up with any sweeteners for the market in the shape of more easing.”

“There is a big risk the economy may not recover as strongly or as quickly as had been priced in by US markets,” said ThinkMarkets analyst Fawad Razaqzada.

The Fed minutes “revealed that policy makers… were concerned that coronavirus posed ‘considerable risks’ to the economic outlook. It is very difficult to remain bullish on US equities without witnessing a sizeable correction first.”

After bottoming in March, world equities have surged thanks to a wall of cash support from the Fed and other central banks.

But with the multi-trillion-dollar fiscal rescue hammered out earlier this year now running out, US lawmakers are under pressure to stump up more.

While Democrats and Republicans dig their heels in on a new package, the chances of anything coming soon are slim.

Adding to the downward pressure were ever-present China-US tensions.

– Key figures around 1340 GMT –

New York – Dow: DOWN 0.4 percent at 27,592.87 points

London – FTSE 100: DOWN 1.5 percent at 6,020.95

Frankfurt – DAX 30: DOWN 1.3 percent at 12,813.52

Paris – CAC 40: DOWN 1.3 percent at 4,911.34

EURO STOXX 50: DOWN 1.3 percent at 3,273.83

Tokyo – Nikkei 225: DOWN 1.0 percent at 22,880.62 (close)

Hong Kong – Hang Seng: DOWN 1.5 percent at 24,791.39 (close)