U.S. Stocks Slip with Jobless Claims
U.S. stocks and index futures dropped as investors awaited what is expected to be the worst jobless claims in the U.S.
Companies had to lay off workers with the rise in COVID-19 cases largely impacting global economies and businesses. Investors expect data to lay bare the economic damage from the coronavirus pandemic.
The U.S. Senate supported the massive bill aiming to assist jobless workers and industries hit by the COVID-19 outbreak. This bill heads to the House of Representatives for voting on Friday.
Investors of stocks worry whether the bill would do enough to lift the economy and await the Labor Department’s data. This jobs data forecast will likely show a huge spike in unemployment in the United States caused by the outbreak.
Poll predicts weekly jobless claims range from about 250,000 initial claims to up to 4 million. The poll shows a median forecast of 1 million claims topping the highs logged during the 1982 and 2009 recessions.
The stock market shows STOXX600 falling at 1.6%, with bourses in Frankfurt, London and Paris all dropping at around 2%. Meanwhile, MSCI’s broadest index of Asia-Pacific shares outside Japan went up 0.7% but regional performances varied. Moreover, the Nikkei snapped three days of gains with a 4% drop.
Uncertainties on U.S. Stocks Remain
Despite the government and central bank’s support measures, U.S. stocks investors were anxious to know how things can work out. They struggle with virus concerns and how bad its impact would be.
Salman Baig, portfolio manager at Unigestion in Geneva said, “no one is sure how long things will be locked down”. “Or how wide the virus will spread, the death toll and hit on the economy will look like”, she added.
Markets will get a glimpse of the virus’ damage to the U.S. economy when data on jobless claims are released.
RBC Capital Markets economists had expected over 1 million saying “it is now poised to be many multiples of that”. Citi Private Bank said the peak total could reach 15-18% of the total U.S. workforce or 25 million people. It is quite likely lockdowns drive unemployment further a 5-10 million range for initial jobless claims.
In stock trading, E-mini futures for the S&P 500 was down 2%, while the MSCI fell 0.2%.
Government stimulus comes against a backdrop of uncertainties on U.S. stocks, and it also reflects in currency markets. As COVID-19 spreads, the economic damage will grow across the globe.
