The Wednesday Market Minute
- Global stocks extend slump as coronavirus infection rates hit record highs in Europe and the United States.
- U.S. 7-day average of new COVID cases tops 70,000 for the first time on record, while hospitalizations rise to the highest since mid-August.
- Europe mulls new lockdowns as new cases surge past 230,000 in a single day this week: France and Germany ready strict closures to tame the virus' spread.
- The dollar rises to a multi-week high against its global peers while German bund yields hit the lowest since March as investors flee risk markets around the world.
- Market volatility rises to the highest since early September as polls show a tightening Presidential race just six days out from the November 3 vote.
- Wall Street futures suggest a notably weaker open Wednesday ahead of earnings from Boeing and General Electric.
U.S. equity futures slumped lower again Wednesday, as stocks looked set to erase all of their gains for the month of October, as investors continue to react to surging coronavirus infection rates in major world economies.
The seven-day average for new coronavirus cases in the United States topped the 70,000 mark for the first time on record yesterday, official data confirmed, while hospitalization rates surge more than 10% in as many as 35 states to hit their highest levels since mid-August.
In Europe, reports continue to suggest that German Chancellor Angela Merkel will order the closure of bars, restaurants and pubic event, while France is said to be mulling a national lockdown that could last as long as four weeks amid a torrid rise in new infections that has torn through Europe's major economies over the past three weeks.
And while markets are attempting to adjust to the economic impact of business closures, travel restrictions and work-from-home dynamics in a second wave, volatility has leaped to a two-month high as polls in key swing states narrow the difference between President Donald Trump and former Vice President Joe Biden, setting up the prospect for an extended election count that could send markets on a wild ride following next week's vote.
The dollar index, meanwhile, is posting solid gains against its global currency peers in safe-haven trading, rising 0.75% to 93.617 in overnight trading, while benchmark 10-year Treasury note yields continue to rally, falling to a two-week of 0.751%.
The VIX index, a key gauge of market volatility, was marked 12% higher at 37.33 points, the highest since early June.
U.S. equity futures, meanwhile, are indicating another day of sharp declines on Wall Street, with contracts tied to the Dow Jones Industrial Average indicating a 640 point opening bell slump and those linked to the broader S&P 500 priced for a 68 point slide, a move that would wipe out all of the benchmark's gains for the month and leave it up just 4% for the year. Nasdaq Composite futures are indicating a 200 point opening bell decline.
Microsoft (MSFT) - Get Report shares were also in focus, falling 2.75% in pre-market trading, after topping Street forecasts for sales and earnings late Tuesday, while investors prepped for third-quarter updates from Boeing (BA) - Get Report and General Electric (GE) - Get Report before the start of trading.
GE, however, surged 5.35% after it posted a surprise adjusted profit and said industrial free cash flows would rise to $2.5 billion over the final three months of the year.
European stocks fell to a five-month low in early Frankfurt trading, while benchmark 10-year German bund yields tumbled to a March low of -0.64% as investors fled from risk markets amid the region's surge in infection rates, which topped 230,000 on Monday alone to take the Continental total past 8.54 million.
The Stoxx 600 index, the broadest measure of regional share prices, was marked 2.75% lower while Britain's FTSE 100 tumbled 2.1% in early London trading.
Global oil prices were also under heavy selling pressure Wednesday, hit by both concerns for fading demand as COVID restrictions hit economic activity and a report last night from the American Petroleum Institute that showed a surprise increase of 584,000 barrels in domestic crude stocks.
WTI contracts for December delivery, the new U.S. benchmark, traded $1.84 lower from their Tuesday close in New York and were changing hands at $37.73 per barrel in early European dealing while Brent contracts for December, the global benchmark, were seen $1.65 lower at $39.55 per barrel.
Asia stocks were also heavy in overnight trading, while the safe-haven yen rose to 104.30 against the U.S. dollar, as markets followed last night's weaker close on Wall Street.
Tokyo's Nikkei 225 ended the session 0.3% lower at 23,418.52 points while the MSCI ex-Japan benchmark was seen 0.13% lower heading into the final hours of trading.