American stock markets fell today, as European stock indices witnessed a significant decline due to fears of a second wave of the Coronavirus pandemic. This potential return to crisis levels of infection could delay the global economic recovery that has been anticipated – or hoped for – in second half of the year.
Additionally, a wave of profit-taking has pushed the US dollar up as traders have been closing their positions in high-yielding markets to generate liquidity. Gold prices have reduced its gains this week due to the sale of gold that was previously acquired to cover the market risk of equity-heavy portfolios.
The total number of coronavirus infections has risen today to more than 9.3 million, and the International Monetary Fund today reduced its forecast for global economic growth, adding to fears of a sluggish recovery. Today, according to Bloomberg, the US Trade Representative's office reported that the US is considering imposing tariffs worth a total of $3.1 billion from the United Kingdom, France, Spain and Germany, which has increased anxiety in the markets.
The Dow Jones fell below 26,000 points, and the S&P 500 fell more than 0.60%. Concurrent with the decline of stock indices, the US dollar rose to achieve gains against most major currencies.
The rise in the dollar pushed the euro down from its top at $1.1324, reaching its lowest point around 1.1264. The British pound fell from 1.2541 to a low of 1.2464. The USDJPY pair is trading between the 106.37 and 107.79 yen. These relatively limited ranges are a result of the similarity of traders' strategies with respect to the yen and the dollar as the high-yielding financial markets moved.
Gold prices have fallen after touching their highest point since September 2012 at $1779 today, but gold prices remain within an upward trend over the course of the week's trading.
As for oil prices, WTI crude oil contracts fell from above $40.51 to a low point at 39.35 per barrel from August 2020 contracts.
Today, traders are awaiting US oil inventory data, with expectations that US reserves may rise to a new record for the third week in a row. There is little other major economic data on the horizon at present, but any statements that from the US government may as usual have an impact on the markets.