Stocks Head Lower As Coronavirus Fears Dominate
Fiona Cincotta July 10, 2020 7:31 AM
European burses are pointing to a lower open in what is gearing up to be a risk off session.
A mixed close on Wall Street saw the Dow Jones and the S&P close in the red, whilst the tech focused Nasdaq 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, Alphabet and Apple 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.
Riskier assets such as equities are out of favour, as are riskier currencies. Meanwhile the safe haven US Dollar is gaining ground. The US Dollar jumped following jobless claims data in the previous session, which showed that whilst initial claims were at a 4 month low, the total number of people claiming unemployment benefits rose to 32.9 million stoking fears over the health of the recovery.
Oil Extends Losses
Oil is also trading on the back foot, extending losses from Thursday, amid fears a return to lockdown as US 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% today.
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.
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