Markets tread water, dollar falls amid sluggish US stimulus talks

The ongoing stalemate over the next round of US coronavirus relief aid has left investors in limbo across the globe.

US dollars
The dollar was 0.2 percent lower against a basket of currencies amid investors' anxious wait for a stimulus deal between United States Congressional Democrats and the Trump White House [File: Scott Eells/Bloomberg]

Global stocks were treading water and the dollar fell on Friday as investors were left hanging, waiting to see if a long-awaited agreement on a fresh United States coronavirus relief package will finally be reached.

US House of Representatives Speaker Nancy Pelosi said it was still possible to get another round of COVID-19 aid before the election, but that it was up to Republican President Donald Trump to act, including talking to reluctant Senate Republicans, if he wants to see it materialise.

But Treasury Secretary Steven Mnuchin warned a deal would only be possible if Pelosi was willing to compromise.

“There’s been a waiting game for a stimulus package,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We keep getting teased by reports of supposed progress and then those hopes get dashed.”

The Dow Jones Industrial Average closed down 28.09 points, or 0.1 percent, at 28,335.57, the S&P 500 settled up 11.90 points, or 0.3 percent, at 3,465.39. The Nasdaq Composite Index closed up 42.28 points, or 0.4 percent, at 11,548.28.

For the week, the Dow was down 0.9 percent, with the S&P 500 0.5 percent lower and the Nasdaq down 1.1 percent.

The biggest weight on the three indexes on Friday was a 10.6 percent slump in chipmaker Intel Corp after it reported a drop in margins as consumers bought cheaper laptops and pandemic-stricken businesses and governments clamped down on data centre spending.

The dollar was 0.2 percent lower against a basket of currencies, leaving it just shy of a seven-week low and set to decline about one percent on the week, with uncertainty ahead of the November 3 election weighing on the greenback.

Trump trails Democratic former Vice President Joe Biden in national opinion polls, but the contest is much tighter in some battleground states where the election will likely be decided.

The final debate between Trump and Biden on Thursday offered few surprises and little new direction.

European stocks fared better, boosted by positive earnings updates from Barclays and a surge in Airbus, but nagging worries about the economic impact of surging COVID-19 cases saw markets post their biggest weekly decline in a month.

Breaking a four-day losing streak, the pan-European STOXX 600 index advanced 0.6 percent, with London’s FTSE 100 outperforming its European peers after Barclays jumped 7 percent on strong results.

In the Asia-Pacific region, MSCI’s broadest index of the region’s shares outside Japan was flat, while Japan’s Nikkei ticked up 0.2 percent and the CSI300 index of mainland China shed 1.3 percent.

The MSCI World Index, which follows shares in nearly 50 countries, was up 0.3 percent, but set for its biggest weekly fall in a month.

The pound fell against the dollar and euro on Friday after the United Kingdom Purchasing Managers’ Index (PMI) fell to a four-month low, but was still set to end the week up, after a new phase of intense Brexit talks restarted.

The chief negotiators for the UK and European Union met on Friday for talks on a last-gasp trade deal to avert a tumultuous finale to the five-year Brexit crisis.

The pound was down 0.4 percent at $1.3031 on the day but up 0.9 percent on a weekly basis. The euro ticked up 0.3 percent against the dollar.

The Chinese yuan also held its ground against the dollar after an official at China’s foreign exchange regulator said it has been more stable than expected, suggesting authorities are not too worried about its recent rise.

Oil prices fell on concerns about rising Libyan crude supply and demand concerns caused by surging coronavirus cases in the US and Europe. Brent futures settled at $41.77 per barrel, down 69 cents, or 1.63 percent. US crude futures settled at $39.85 per barrel, down 79 cents.

Gold eased as the dollar recouped some losses, but uncertainty going into the US elections limited bullion’s losses.

Source: Reuters