Stockmarkets are not going to be the easiest places to be in this week.
There’s the volatility from the US elections – especially if it’s a close result and Donald Trump won’t go quietly after Tuesday’s vote; there’s the rising toll of COVID-19 infections, especially in the US and Europe, there’s the Fed meeting and the US jobless data on Friday.
Everyone capable of battering market sentiment and direction.
In Australia there’s the Reserve Bank Board meeting tomorrow and what will be another loosening of monetary policy – the US Federal Reserve meetings this week, earnings seasons continue in the US, Europe and Australia and there’s the usual start of month data releases around the world as well.
All this makes the 50 plus point rise in the overnight futures market for the ASX 200 on Friday night look very much out of place in the wake of the worst week for global shares since March.
Wall Street’s megatechs added to the woes on Friday becoming the latest casualties in a sell-off blamed on growing concerns over the results of Tuesday’s poll and the soaring infection numbers for coronavirus in Europe and especially the US.
The US reported a record (unwanted) just over 100,000 new COVID cases on Friday compared to 91,000 the day before (according to Reuters).
More than 227,000 Americans have died and the number is rising by more than 900 to 1,000 a day.
On Saturday England went to a near-total lockdown for a month from this Thursday as infection numbers topped one million. Scotland, Wales, and Northern Ireland are also under varying restrictions and lockdowns.
This means the UK will see the recession extend into 2021.
That helps explain why the number of US voters casting their ballots is closing on 90 million (and could reach 100,000 million by Tuesday, or more than 70% of those who voted in the entire poll in 2016.
Pre-poll votes cast in Texas now top the number of all ballots cast in 2016, so worried are ordinary Americans.
The rising toll of cases and surging pre-poll votes helps explain why Wall Street last week suffered its heaviest weekly fall since late March, just as the sell-off bottomed out and the rapid rebound started.
This time it’s the reverse – the latest quarterly results from the megatechs, Apple, Alphabet, Amazon, Facebook and Twitter were mostly solid but except for Alphabet, the shares sold off heavily.
The MSCI All Country World index of global equities fell 1.2%, leaving it down 5.3% over the five sessions, while the US S&P 500 closed down 1.2% after a mixed day’s trading, to end the week 5.6% lower.
The tech-heavy Nasdaq Composite slid 2.4% on Friday to be down 5.5% for the week. The Dow lost 0.6% on Friday after a late rally trimmed the day’s losses (it was off more than 400 points at one stage).
For the week, the Dow fell 6.5%.
But last week’s losses converted what were modest gains for October into worrying losses. For the month, the Dow slid 4.6%, the S&P 500 dipped 2.8% and the Nasdaq fell 2.3%.
Eurozone shares lost 6.7% (after a 0.1% rise on Friday), Japanese shares fell 2.3% and Chinese shares lost 0.5%. Reflecting the weak global lead Australian shares fell 3.9% led by declines in cyclical sectors including energy, industrial, retail and financial stocks.
Despite the weak lead from Wall Street, the optimists in the Aussie market boosted the futures market overnight Friday with the SPI looking to open the market 52 points higher, an unrealistic gain looking at the gathering gloom globally.
The Australian sharemarket finished the last trading day of the month on a sour note, racking up its worst weekly fall since April.
The S&P/ASX200 was flat towards the end of trade but tumbled in the final moments to close down 0.55% at 5928 while the All Ordinaries Index dropped the same amount to 6,133.
But unlike other markets the ASX rose 1.9% in October.
Sliding oil prices didn’t help – they were down more than 10%, gold was mixed, as were other commodities. US bond yields rose but yields fell elsewhere.
The S&P 500 has fallen about 9.4% since hitting an all-time high in early September in a rally driven by the tech mega caps whose quarterly results failed to meet optimistic expectations.
Apple shares tumbled about 5.6% after it posted the steepest drop in quarterly iPhone sales in two years due to the late launch of new 5G phones.
Amazon shares fell 5.4% after it forecast a jump in costs related to COVID-19, while Facebook Inc shed 6.3% as it warned of a tougher 2021.
Shares of Alphabet, parent of Google, were a rare bright spot, ending up 3.8% after reporting a 59% jump in third-quarter earnings on a revenue increase of 14%.
Twitter Inc slumped about 21.1% after the micro-blogging site added fewer users than expected and warned the US election could affect ad revenue.
