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Investors in the US$51 trillion US stock market are beginning to accept the view that the spread of the Delta coronavirus variant will curb the global economic recovery and threaten a record rebound.
The benchmark S&P 500 index fell the most on Wednesday A month Before a small rise on Thursday. Large stock indexes in Europe and Asia closed lower on Thursday.
With the re-spread of the coronavirus, signs of a slowdown in the recovery in recent weeks have accumulated. Surveys have shown that the growth of business activity in many regions of the United States has slowed down and the trend of consumer confidence has deteriorated.Tuesday’s data exacerbated concerns for investors because Retail sales The rate of decline in the country is faster than expected. China’s weak economic data will only increase worries.
Coupled with the signals that Fed policymakers are preparing to cut emergency stimulus measures in the coming months, fund managers are skeptical of the stock market’s ability to rise above already high levels.
Trading in the options market underscores the cautious views of investors, as many traders turned to derivatives that can prevent the decline in stock value on Thursday. According to data from the Institute of Investment Companies, investors have added government money market accounts for the second week in a row as investors switch to cash.
Jim Tierney, Portfolio Manager of AllianceBernstein, said: “The market is at a historic high.” “Look where we are A year later … Look at the high P/E ratio. You put a lot of things together, people are just nervous, and their tendency is,’Let me take a little money from the table. ‘”
The surge in coronavirus cases associated with the more contagious variant of Delta prompted economists at Goldman Sachs to almost halve the third-quarter economic growth forecast for the United States on Wednesday. They now predict that the GDP will grow by 5.5% between July and September, which is a sharp drop from the previous estimate of 9%. This dragged down their full-year forecast for 2021 by 0.4 percentage points to 6%.
“It turns out that the Delta variable has a greater impact on growth and inflation than we expected,” said an economist at the bank. “In August, spending on catering, travel and some other services may decline, but we expect the decline to be small and short-lived.”
Given the concerns about Covid-19, Fed officials also seem to be more comfortable with the risk that the economy may not be able to reopen or the job market may not recover as smoothly as initially expected.Jay Powell Handle a case At the last monetary policy meeting in July, the impact of the Delta variable on the economy may not be as severe as the previous outbreak, but the minutes of that meeting indicated increase awarenessThe surge in cases may delay any adjustments to stimulus measures.
Barclays senior US economist Jonathan Miller said: “The risk of the new crown virus is re-emerging and becoming a very important downside risk.” “It’s back. [Fed’s] The wording in the radar and meeting minutes allowed them to freely control the gradual decrease. ”
The yield on US Treasury bonds, the backbone of the global financial market, has fallen sharply this month. But in recent days, they have fallen to six-month lows, highlighting the continued demand for safe-haven securities as the economic situation becomes more ambiguous.
“No one points to things and says they are cheap,” said John Leonard, head of global equity at Macquarie Asset Management. “The argument is that we all know that the party must end at some point, but now is not the time to leave the party because the alternative is very unattractive.”