Wall Street sold off in the final hour of the session to turn a modest slip into a sharp, 2% slump for the S&P 500, a 457 slide for the Dow, and a big loss for the booming Nasdaq.
The Dow ended 457 points lower, or 1.89%, at 23,764.78, after rising more than 160 points earlier in the session. The S&P 500 fell 60 points, or 2.05%, to end 2,870.12, while the Nasdaq broke a six-day winning streak to drop around 190 points, or 2.06%, to finish near 9,002.55.
The late sell-off transferred to the overnight ASX 200 futures market and it was down 68 points or more than 1% at 6.20am after only being 4 points lower at 5.45 am. That was after a 1% fall on Tuesday in the ASX 200 which ended at 5,403.
US investors took profits in the wake of a warning from the top US infectious disease expert that premature moves to reopen the nation’s economy could lead to novel coronavirus outbreaks and set back economic recovery.
It was a case of Oops as second thoughts emerged among investors who has been increasingly upbeat about the scattered re-openings in the US after the remote appearance of Dr. Anthony Fauci before the US Senate.
Fauci, the director of the National Institute of Allergy and Infectious Diseases, said that the virus was not yet under control and that there would not likely be a treatment or vaccine in place by late August or early September.
As well there were reports of new COVID-19 infection clusters in China, South Korea, and Germany where lockdowns had been lifted. France’s death toll climbed past that of Spain.
Investors had noted the fall in US consumer inflation to its lowest annual rate since the GFC thanks to sharp falls in the cost of petrol, airline tickets, travel generally and clothing.
The CPI fell 0.8% in April which took the annual rate to just 0.3% from 1.5% in March. It was 2.5% in January.
But prices for food consumed at home jumped 2.4% in the month in the largest single-month rise since 1974, the US
For local investors on the ASX the late fall will mean another solid night for iron ore prices will pass.
Iron ore prices had the second strong session in three days with a jump of 3.4% to top the $US90 a tonne level for the first time in more than a month according to the Metal Bulletin.
The price ended at $US91.67 for 62% Fe iron ore fines delivered to northern China. Last Friday the price jumped 5%.
Doubts about the security of Brazilian supplies of high-grade iron continue to mount as the COVID-19 infection rates soar in Brazil and more and more cities and states are locked down, especially in the northern state of Para where much of the country’s high-grade ore is mined.
Other commodities were mixed.
West Texas Intermediate crude for June delivery rose $US1.64, or 6.8%, to settle at $US25.78 a barrel in New York. That was the highest finish for a front-month contract since April 6.
In Europe, July Brent crude futures rose a more modest 35 cents, or 1.2%, settle at $US29.98 a barrel.
Oil prices reacted positively to the news that Saudi Arabia will lop a million barrels a day from its June production limit. The new figures will be 7.492 million barrels a day, the Saudi Arabian press agency said.
Comex gold for June delivery rose $US8.80, or 0.5%, to settle at $US1,706.80 an ounce following losses in each of the last two sessions. Comex July silver added 2.9 cents, or 0.2%, at $US15.709 an ounce. July copper shed 0.9% to $US2.359 a pound.
