US stocks pressured by Washington stimulus stalemate

Wall Street stocks mostly fell and European markets retreated as disappointment over stalled United States stimulus talks blunted the lift from better-than-expected US employment data.

Data showed new weekly claims for unemployment benefits fell below one million for the first time since the coronavirus pandemic struck in March.

The 963,000 seasonally adjusted initial claims filed in the week ended August 8 came in below expectations.

But talks in Washington on another round of fiscal spending to boost the coronavirus-bruised US economy took another hit as the Senate adjourned for summer recess with no deal.

The parties in Washington “are miles apart and that’s really disappointing,” said FHN Financial’s Chris Low.

Major US indices had a choppy session, with the S&P 500 ending 0.2% lower. However, both the S&P 500 and Nasdaq are still near all-time highs.

Earlier, European equity markets retreated while Asian markets were mixed. 

Low said investors had taken heart from the better economic data, which suggested the resurgence of the coronavirus over the last month has not significantly slowed the recovery. Another factor has been optimism that a coronavirus vaccine will be successful in the near-term. 

“At the end of the day, the level of the market right now makes no sense unless the economy is okay a year from now,” Low said.

US-China talks

There is also a focus on this weekend’s talks between the United States and China to review their trade pact signed in January.

There have been concerns that rising tensions between the superpowers could scupper the agreement, which ended, or at least called a truce in a painful and long-running trade war that battered the global economy.

But top officials on both sides have expressed confidence the deal will be kept in place and analysts said there was little desire from either side to scrap it.

“From the US perspective, imposing more trade taxes on US companies in the middle of a pandemic would generally be considered a bad thing for the stock market,” said Stephen Innes at AxiCorp.

“After touting the stock market’s miraculous recovery…[US President Donald] Trump would be vehemently against anything that would trigger a drop in stocks,” he added.

“From China’s perspective, [President Xi Jinping] probably wants to keep US relations on good terms, given the strong likelihood of a change in the US administration with Democrats polling well.”

Weaker oil demand

Oil prices edged lower, as the International Energy Agency (IEA) cut its 2020 forecast for global oil demand to 91.9 million barrels per day, the first downgrade in a number of months.

“By December 2021, global oil consumption will still be 2% lower than at the end of 2019,” the IEA said.

The aviation and road transport sectors, both essential components of oil consumption, were continuing to struggle, the IEA said. 

Road transport was being impacted “as people avoid non-essential trips and working from home remains the norm in much of the west,” the report said. 

Key figures around 8:50 pm GMT

• New York – Dow: DOWN 0.3% at 27,896.72 (close)
• New York – S&P 500: DOWN 0.2% at 3,373.43 (close)
• New York – Nasdaq: UP 0.3% at 11,042.50 (close)
• London – FTSE 100: DOWN 1.5% at 6,185.62 (close)
• Frankfurt – DAX 30: DOWN 0.5% at 12,993.71 (close)
• Paris – CAC 40: DOWN 0.6% at 5,042.38 (close)
• EURO STOXX 50: DOWN 0.6% at 3,342.85 (close)
• Tokyo: Nikkei 225: UP 1.8% at 23,249.61 (close)
• Hong Kong: Hang Seng: DOWN 0.1% at 25,230.67 (close)
• Shanghai: Composite: FLAT at 3,320.73 (close)
• Euro/dollar: UP at $1.1820 from $1.1784 at 9 pm GMT
• Pound/dollar: UP at $1.3066 from $1.3034
• Euro/pound: DOWN at 90.41 pence from 90.42 pence
• Dollar/yen: FLAT at 106.91 yen
• West Texas Intermediate: DOWN 1% at $42.24 per barrel 
• Brent North Sea crude: DOWN 1% at $44.96 per barrel

– Rappler.com