Things got real nasty on Thursday afternoon, with the US stomping into the session with an ugly GDP reading and a power-hungry President.
Thought it wasn’t exactly a surprise, and came in a smidge better than consensus forecasts, there is arguably no way to greet news of a 32.9% contraction in the second quarter – at the annualised rate – than with a cliff dive into the red.
That number – the worst since the 1940s – caused the Dow Jones to fall close to 500 points, leaving the index in danger of sinking under 26000 for the first time in 3-weeks.
Remember, that US GDP reading comes after a worse than forecast 10.1% contraction in the German economy, meaning the markets were already in a foul mood.
The DAX was, unsurprisingly, the most severely hit, plunging 4.4% to a month-low of 12275. The CAC, following in its footsteps, dropped 3.2% to 4808. As for the FTSE – which spent the morning nursing some Shell and Lloyds-shaped wounds – it fell 200 points to 5930, a level last seen in mid-May.
Thursday’s German and US GDP readings have acted as something of a wake-up call for investors, reminding them exactly what the economic cost of this pandemic – which is far from over – actually is.
On top of all this, Donald Trump tweeted that November’s Presidential election should be delayed, as he continues to fabricate the threat of mail-in voting fraud. A potential glimpse of how he will behave if he does lose to Joe Biden, and the last thing investors wanted to hear on an already historic day for bad news.
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