As Covid-19 cases continue to rise at alarming levels in the US, financial markets in the country have also taken a dramatic downturn. Precious metals have also been hit, as four precious metals traded on the futures markets saw a double digit decline.
On Monday of this week, The Dow Jones industrial average opened higher than its fixed 50 day moving average of 27,983. Having started the day at 28,181 points, it ended the day 495 points lower, taking it well below the fixed 50 day moving average. Tuesday saw a slightly more modest drop, but Wednesday saw yet another big hit. All in all, The Dow dropped 943 points in 3 days, equating to 5.9%.
US equities took their worst hit since the 23rd of last month, with all 3 major indices closing 2.29% down from the Dow Jones industrial average. Individually, the S&P 500 lost 1.86% and the NASDAQ composite lost 1.64%.
Gold, silver and palladium all suffered losses as well this week. The December 2020 gold futures contract lost a total of 1.8%, while silver suffered a much heavier 4.66% decline. Palladium sustained a 4.63% loss over the course of the week. Panic selling was the go-to strategy across all sectors in a grim week for the US economy.
Usually, the looming presidential election would be good news for market participants. However, thanks to the rising number of Covid cases and hospitalizations in the US, market participants are in a state of alarm. 12 states in the US this week set new records for the number of hospitalizations from the virus. All of this, twinned with the failure of Congress, the Senate, and the current administration to agree on a fiscal stimulus bill has only helped exacerbate this week’s financial meltdown.
Across the pond, countries including the UK, France and Germany have announced plans to shut down large sections of public life. The news comes as, like the US, they are in the crux of a second wave. As a result, the economies of these countries, and most across the world are likely to see further steep declines. There are some exceptions, however, as one of the only countries to adopt the “herd immunity” approach back in March, most sections of the Swedish economy have remained open to some extent throughout the pandemic.
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