Stocks fell in Asia on Friday after a crush of dismal economic data helped send markets lower overnight in a soft end to a historic and behemoth month for equities.
Most regional markets were closed for the May Day holiday. But Japan’s Nikkei 225 slipped 2.3% to 19,730.41 while Australia’s S&P/ASX 200 fell 3.9% to 5,308.90. Futures contracts for the S&P 500 and Dow industrials were more than 1% lower.
The S&P 500 fell 0.9% on Thursday after reports showed millions more American workers filed for jobless benefits last week and Europe’s economy slumped to its worst performance ever in the last quarter, among other weak points. It’s the biggest loss for the U.S. stock market in more than a week, but just a move in the S&P 500’s 12.7% gain for April, its best month in decades.
“Maybe it was all month-end unease, or maybe they just needed to hear something new and impactful, and we’re finally seeing buying fatigue,” Pepperstone’s Chris Weston said in a comment.
Pledges from the Federal Reserve and other central banks to do whatever it takes to prop up the economy during the coronavirus crisis have buoyed buying by investors betting that a recovery will come soon. Professional investors say the optimism may be premature.
“The April bounce was an assumption that it would be a short V-shaped recovery, both at the economic level and at the business and corporate level,” said David Lyon, investment specialist worldwide at JP Morgan Private Bank. “In our opinion, he probably got a bit ahead of himself. We believe the recovery will be longer and slower.
The month’s equity gains came amid chaos in the oil market, where prices in one wedge fell below zero for the first time, and as investors continued to rush into US government bonds in quest for security. Reports are mounting day by day showing the severe blows the economy is taking from widespread stay-at-home orders meant to slow the spread of the virus.
Early Friday, benchmark U.S. crude rose 84 cents, or 4.4%, to $19.68 a barrel in electronic trading on the New York Mercantile Exchange. It is still well below the level of around $60 where it started the year as concerns mount over the effects of a collapse in demand and storage reservoirs fill almost to their limits.
Brent crude, the international standard, gained 52 cents to $27.00 a barrel.
The deluge of gloomy economic data on Thursday – along with some investors looking to sell after weeks of gains – was enough to send S&P 500 stocks down 86% and European stocks down sharply.
The S&P 500 fell 27.08 points to 2,912.43. The Dow Jones Industrial Average lost 1.2% to 24,345.72 and the Nasdaq fell 0.3% to 8,889.55.
Along with U.S. unemployment figures, which took the total to 30 million in just six weeks, data released on Thursday showed consumer spending fell a record 7.5% in March from the last month. This is crucial for an economy where consumer spending accounts for 70% of the total.
Among European countries that use the euro, the economy contracted by 3.8% in the first three months of the year compared to the previous quarter. This is the largest contraction since records began in 1995. Discouraging data has also arrived on the Chinese economy, which is concerning for anyone expecting a first-in, first-out economic wave.
“This is the saddest day for the global economy we have ever seen” in the 50 years that economists at High Frequency Economics have tracked economic data, they wrote in a report. “Statistics offices in the economies we monitor released 19 economic reports overnight. They revealed historic declines in activity and a rise in unemployment on a scale we had never seen before. We are sad.”
The 10-year Treasury yield fell slightly to 0.62% from 0.63% on Thursday evening. It started the year at almost 1.90%. Yields on Treasuries tend to fall when investors revise down their expectations for the economy and inflation.
In currency trading, the dollar hit 107.11 Japanese yen, down from 107.13 yen on Thursday. The euro was at $1.0947, down from $1.0955.
AP Business writers Stan Choe, Alex Veiga and Damian J. Troise contributed.