Donald Trump's tweet suggesting delaying the election jolted investors
London (AFP) - World stock markets were little changed Friday after almost unremitting bad news of rapidly-shrinking economic activity, highlighting the “devastating impact” coronavirus has had on the global economy, analysts said.
A tweet from US President Donald Trump suggesting delaying November’s elections also jolted investors, helping send the euro soaring to a two-year peak at $1.1909 in early Asian deals.
Markets in Europe were digesting massive double-digit falls in economic output as well as a swathe of mostly grim corporate earnings which only further highlighted the damage done by the virus.
France’s economy contracted by a record 13.8 percent in the second quarter, Spain slumped 18.5 percent, Portugal contracted 14.1 percent and Italy shrank 12.4 percent.
Europe as a whole was hammered by its sharpest recorded contraction in the second quarter, with GDP down 12.1 percent in the eurozone and 11.9 percent across the full EU.
Gains in the techs helped provide some support but not enough to make a huge difference at the end of yet another turbulent week.
The tech-rich Nasdaq Composite Index led the US market, adding 0.8 percent in early trade after tech giants Amazon, Alphabet, Apple and Facebook all reported better-than-expected results as the sector looks to be the big winner amid the pandemic upheaval.
Analysts had questioned whether tech shares could go higher still after the results came in, but Amazon, Apple and Facebook all won big gains early Friday, while Google-parent Alphabet fell.
- Historic contractions -
“GDP figures released today confirmed the devastating economic impact of the pandemic,” noted Oxford Economics analyst Rosie Colthorpe.
“Today’s GDP figures all showed historic contractions in output but that the pandemic has caused such massive economic damage is not a surprise.”
The effect of COVID-19 on the US economy was even more marked than in Europe with a 32.9 percent contraction between April and June as businesses were shut down to prevent the spread of the killer disease.
That was the worst US quarter since records began in the aftermath of World War II.
The numbers added to fears about the long-term economic impact of COVID-19 and overshadowed a better-than-forecast read on Chinese factory activity that suggested the country is slowly emerging from the crisis.
- ‘Grim day at office’ -
“It was a grim day at the office for the global economy… as the extent of the COVID-19 damage was laid bare,” said PVM analyst Stephen Brennock.
“Europe’s biggest economy shrunk by … the biggest fall since 1970 and wiped out nearly a decade of German growth.
“Likewise, US GDP contracted by a whopping 32.9 percent at an annualised pace over the same period. The slump was slightly less than feared but still the worst since government records began in 1947.
“What is more, this puts the world’s biggest economy firmly in recession after posting negative growth in the first quarter.”
In Asia, Tokyo and Sydney were worst-hit with traders worried about a fresh spike in infections in both countries.
- Key figures around 1345 GMT -
New York - Dow: UP 0.1 percent at 26,345.83
London - FTSE 100: FLAT at 5,985.13 points
Frankfurt - DAX 30: UP 1.0 percent at 12,494.70
Paris - CAC 40: UP 0.3 percent at 4,868.12
EURO STOXX 50: UP 0.6 percent at 3,227.38
Tokyo - Nikkei 225: DOWN 2.8 percent at 21,710.00 (close)
Hong Kong - Hang Seng: DOWN 0.5 percent at 24,595.35 (close)
Shanghai - Composite: UP 0.7 percent at 3,310.01 (close)
Euro/dollar: DOWN at $1.1813 from $1.1847 at 2100 GMT
Dollar/yen: UP at 105.52 yen from 104.73 yen
Pound/dollar: UP at $1.3127 from $1.3096
Euro/pound: DOWN at 89.97 pence from 90.46
West Texas Intermediate: UP 1.3 percent at $40.37 per barrel
Brent North Sea crude: UP 0.8 percent at $43.28