Wall Street’s falls aren’t that bad

2020-09-21 22:05

publication
2020-09-21 22:05

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Nasdaq fell for the fourth session in a row and deepened the September correction. Nevertheless, Monday’s sell-off on Wall Street turned out to be much milder than in Europe, where the main indices lost over 3%. The stock sell-off was accompanied by a sharp fall in gold prices.

Monday morning session was going to turn out to be red. The specter of a repeat of the spring ones has begun to haunt Europe again lockdownów, ruining the societies of the Old Continent. Therefore the main European indices ended the day with losses generally exceeding 3%.
The quotations of futures contracts on the New York indices heralded sharp drops at the opening of the session across the Atlantic.

But the Americans did not panic seeing red Europe. In the United States, the number of new cases of Covid-19 has been on a downward trend for two months, and a country with a federal regime on the eve of the presidential election is unlikely to face another “economic shutdown”. As a result, the final declines on Wall Street turned out to be much milder than you might fear.

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The Nasdaq Composite virtually netted the initial losses, rising from 2.5% to -0.13%. At the same time, it was the fourth downward session in a row and the ninth of the last twelve sessions that the index ended below the mark. Furthermore, the Nasdaq breached the support line and deepened the September correction.

The S & P500, after a fall of 1.16%, was at the lowest level since July, although at the end of the session it managed to recover a significant part of the losses. The worst performer was the Dow Jones, who, after losing 1.84% (or 510 points), returned to close to 27,000 points.

Americans also have slightly different problems than Europeans. After the leftist death, a judge of the Supreme Court President Trump is likely to want to nominate a new judge at the very end of his term. This would be against the legal tradition and would probably cause a sharp retort from the Democratic Party. As a consequence, we can forget about the quick implementation of the next package of public spending aimed at stimulating the current economic situation at the expense of a massive increase in public debt. And that’s bad news for the stock market.

Bank stocks also came under pressure. JP Morgan Chase fell by 3.1% and Bank of NY Mellon fell by 4%. This is the aftermath of press publications that accuse some of the biggest global banks laundering the so-called dirty money on a massive scale.

There was a sharp sell-off in the commodity markets. The silver price dropped by as much as 8%, and the platinum price fell by nearly 5%. Palladium, crude oil, zinc, wood, wheat and gasoline fell by over 3%. The prices of US natural gas contracts plunged by as much as 10%. Even the price of gold, overpriced by over 2%, was not resisted by sellers.

Krzysztof Kolany

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