Stocks set for horror week, best for dollar since April
By Marc Jones LONDON (Reuters) - After the slide it was the see-saw for markets on Friday, as stocks in large parts of the world, the euro and 'Dr Copper' all headed for their worst weeks since the peak of the coronavirus turmoil and the dollar cemented its best run since April. Asia had managed to end its gloomiest week since the global March meltdown with a modest gain, but with both France and Britain now notching up almost record numbers of new virus cases again and U.S. stimulus hopes fragile, the mood quickly soured
By Marc Jones
LONDON (Reuters) - After the slide it was the see-saw for markets on Friday, as stocks in large parts of the world, the euro and "Dr Copper" all headed for their worst weeks since the peak of the coronavirus turmoil and the dollar cemented its best run since April.
Asia had managed to end its gloomiest week since the global March meltdown with a modest gain, but with both France and Britain now notching up almost record numbers of new virus cases again and U.S. stimulus hopes fragile, the mood quickly soured. [.EU]
Europe's steady start morphed into gradual and then more meaningful selling. London's FTSE <.FTSE> dropped 0.5% but Frankfurt's Dax <.GDAXI> and the CAC40 in Paris <.FCHI> slumped 1.7% to leave the pan-European STOXX 600 <.STOXX> with a more than 4% weekly loss for the first time since June. [.EU]
There was much worse too. The region's bank index hit a new record low <.SX7E>, oil and gas stocks were down more than 6% for the week, and a sea of red on U.S. futures markets meant September was set to be the worst month globally <.MIWD00000PUS> since March's maelstrom. [.EU]
There had been a flicker of hope overnight after squabbling U.S. political parties had at least talked about another super-sized stimulus package [nL2N2GL1UE], but the rise in the dollar <=USD> and demand for safe U.S. and German government bonds remained telling. [GVD/EUR]
The relapse in sentiment has hit emerging market debt, especially countries with weak credit ratings, like a wrecking ball. Argentina's newly restructured bonds have lost around 25%, making it the worst return to markets since Greece in 2012 while plenty of other countries have seen 10% hammerings. [EMRG/FRX]
"It has been a very interesting week" said Saxo Bank's head of FX strategy John Hardy. "We have seen the dollar come back and what is interesting this time is that there also some element of dollar liquidity stress in it again."
He said the talk of more U.S. stimulus ahead of the November presidential election was likely to just be "show boating" especially with a fierce battle over a seat on the Supreme Court now thrown into the mix. [nL2N2GL26X]
"I just can't see anyway that the Democrats can make a deal here with this endgame into the election... It's dirty politics all the way now".
On Wall Street overnight, the Dow Jones Industrial Average <.DJI> rose 0.2%, the S&P 500 <.SPX> gained 0.30% and the Nasdaq Composite <.IXIC> added 0.37%.
While the economic picture in the U.S. remains clouded, the strongest sales of single-family homes in nearly 14 years in August helped to revive some faith in the recovery. [nL2N2GK1D7]
It helped nudge the benchmark 10-year U.S. Treasury yield
In the currency markets, the dollar was hovering near Thursday's two-month highs, at 105.40
For most emerging markets it has been a brutal week though, with some double-digit bond market falls for the weakest countries, the worst week since March for stocks <.MSCIEF> and 4%-5% drops for Mexico's peso
"It has been a very sharp correction this week," said Pictet Asset Management portfolio manager, Robert Simpson. "What the pickup in COVID cases has done is probably brought forward the reduction of risk going into the U.S election."
The dollar's strength this week has also battered commodities, with gold set for its worst week in more than a month. On Friday, spot gold
Copper, which gets its "Dr Copper" nickname from its history as a bellwether of global economic health, was set for its worst week since the March panic with a near 4% drop, while Brent oil
(Reporting by Marc Jones; Editing by Hugh Lawson)
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