Concerns Over Economic Contraction Due to COVID-19 Lockdown Measures
Crude Oil and Gold Also Decline Together
[Asia Economy New York=Correspondent Baek Jong-min] Concerns over economic downturn due to the spread of the novel coronavirus infection (COVID-19) caused a sharp decline in the New York stock market. Conversely, the dollar surged as a safe-haven asset.
On the 28th (local time), the Dow Jones Industrial Average fell 943.24 points (3.43%) to close at 26,519.95, the S&P 500 dropped 119.65 points (3.53%) to 3,271.03, and the Nasdaq fell 426.48 points (3.73%) to finish at 11,004.87.
The sharp decline in the stock market on that day was interpreted as a result of weakened investor sentiment due to the possibility of economic deterioration caused by the spread of COVID-19, such as Chicago banning dine-in services at restaurants to prevent the spread of the virus.
The value of the US dollar, which had been weakening amid rising chances of Democratic presidential candidate Joe Biden's victory, reversed to a strong trend. It is analyzed that the rapid resurgence of COVID-19 pushed the dollar value back up.
The dollar index, which shows the value of the dollar against major currencies, rose 0.57% to 93.457. The dollar index had formed a low of 92.5 on the 21st but surged sharply on this day, turning to a strong trend. The dollar index had recently weakened on expectations of large-scale fiscal spending if Democratic presidential candidate Joe Biden were elected.
MarketWatch reported that as COVID-19 rapidly spreads in Europe and the United States, investors are flocking to the dollar in search of safe-haven assets. In particular, the euro weakened due to control measures implemented in Germany and France to curb the spread of COVID-19, which boosted the dollar's value.
International oil prices also underwent a significant adjustment. West Texas Intermediate (WTI) crude oil for December delivery closed down 5.5% ($2.18) at $37.39 per barrel. Concerns over demand deterioration due to the spread of COVID-19 dragged oil prices down.
December gold futures closed at $1,879.20 per ounce, down 1.7% ($32.70), influenced by the strong dollar.
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