Wall Street fell today as global markets stepped back from the highs they reached on the back of Joe Biden’s new economic stimulus proposal.
After once again hitting record highs earlier this week, Wall Street’s main markets once again showed that they were not immune to the malaise felt around the world.
The S&P 500, Dow Jones, and Nasdaq all retreated in the first hours of trading, with shares in blue-chip tech firms IBM and Intel tumbling.
IBM slumped 10 per cent and was the top drag on the Dow Jones Industrial Average after it missed estimates for quarterly revenue, hurt by a rare sales decline in its software unit.
Intel shed 6.5 per cent as new Chief Executive Officer Pat Gelsinger’s post-earnings comments suggested the lack of a strong embrace of outsourcing.
After two hours of trading the S&P 500 was down 0.3 per cent, the Dow Jones fell 0.5 per cent and the Nasdaq dropped 0.2 per cent.
FTSE 100 falls below 6,700 as traders shun risk
London’s premier market was down 0.5 per cent by the mid-afternoon to stand at 6,689 points. The domestically-focused FTSE 250 was down 0.8 per cent at 20,621 points.
BA owner IAG was the biggest faller today, dropping 4.1 per cent amid fears that the UK could shut its borders due to coronavirus.
Next also shed around 3.0 per cent after pulling out of the bidding for the fragments of Philip Green’s Arcadia retail empire.
David Madden of CMC Markets said that the fall in sterling had gone a long way to keeping today’s losses in check.
It marks yet another poor weak of trading on the FTSE 100, which has struggled to make gains despite the optimism generated by the new US administration.
Having made a rapid start to the year, jumping 6.4 per cent in the first week of January, it has subsequently lagged its continental rivals.
But today the slump continued around the world, with the German DAX down 0.3 per cent and the French CAC down 0.8 per cent.
Connor Campbell of Spreadex said that the lack of risk from investors was likely triggered by fears over how long the current lockdown would last.
“UK markets weren’t helped by the speculation surrounding the length of the current lockdown. Boris Johnson wouldn’t at this stage rule out restrictions stretching into summer, and given the Prime Minister’s proclivity for making and breaking promises, his refusal to opt for the easy answer may’ve set off some alarm bells”, he said.
Wall Street slips from record highs
Overnight, markets across Asia slipped back from the highs of earlier in the week, with the pan-Asian MSCI down 0.6 per cent after three sessions of gains.
Chinese shares started on the backfoot with the blue-chip CSI300 index down 0.3 per cent and Hong Kong’s Hang Seng off 1.4 per cent.
Japan’s Nikkei fell 0.4 per cent after its services output hit a five-month low.
Richard Hunter, head of markets at Interactive Investor, commented “Markets have stumbled at the end of a generally directionless week.
“The wave of optimism which had gripped the US markets the previous day, as the inauguration of the new President passed without incident, and as investors took hope from some positive political noises around the stimulus package, subsided.