The S&P/ASX 200 Index (ASX: XJO) looks set to sink lower again on Friday after Wall Street had its worst day of trade since March.
At the time of writing, SPI futures are pointing to the ASX 200 falling a sizeable 181 points or 3.05% at the market open this morning.
What happened on Wall Street?
U.S. investors were heading to the exits in their droves last night after concerns over a second wave of coronavirus spooked the market.
According to CNBC, the U.S. topped two million coronavirus cases after the virus began to spread more quickly in states that aggressively reopened their economies. These include states such as Texas, Arizona, and North Carolina.
Texas, which was one of the first states to ease lockdown restrictions, has been hit particularly hard. The state has reported three consecutive days of record-breaking hospitalisation numbers.
Evercore ISI macro research analyst, Dennis DeBusschere, appears concerned that a second wave could put economic and company growth expectations at risk.
In a note, courtesy of CNBC, DeBusschere said: “With TX, AZ, CA new cases and hospitalizations increasing and investors concerned that recent protest will fuel a wave of infections, the risk of persistently weak economic and earnings growth has increased. S&P fair value estimates are falling as a result.”
And while the U.S. Federal Reserve is supporting the market with its monetary policy, he warned that the Fed cannot “offset a severe COVID second wave.”
This ultimately led to the Dow Jones Industrial Average crashing 1861.82 points or 6.9% lower on Thursday. This was the Dow’s fourth-worst point loss ever and puts it on course to record its worst weekly decline since mid-March.
Elsewhere, the S&P 500 fell a sizeable 5.9% and the technology-focused Nasdaq index sank 5.3% lower.
Almost all shares were sold off.
While 11 out of 11 sectors traded lower for the day, some areas of the market fell more than most.
Banks, travel companies, and energy shares were particularly poor performers. The latter was driven by a sharp decline in oil prices amid concerns that a second wave could cause another decline in demand.
This could mean it will be another tough day of trade for the likes of Commonwealth Bank of Australia (ASX: CBA), Santos Ltd (ASX: STO), and Webjet Limited (ASX: WEB) on Friday.
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More reading
- 5 things to watch on the ASX 200 on Friday
- ASX 200 drops 3%, Webjet share price sinks
- These ASX 200 stocks just got downgraded by top brokers
- 3 of the best ASX 200 blue chip shares to buy today
- Why the Webjet share price isn’t a bargain buy
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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