Global Stock Markets Are Essentially 'COVID-19 Recovered'... Gold Prices Fall Most in 7 Years

FTSE Global Index at 371.98... Up 47% Since March Low
Safe Haven Gold Price Falls Below $2000 After 5 Trading Days

[Asia Economy Reporter Jeong Hyunjin] As the global stock market rally continues, it appears that losses caused by the novel coronavirus infection (COVID-19) have almost been recovered. The international gold price, a representative safe-haven asset, recorded its largest drop in seven years amid optimism about the economy and news that a COVID-19 vaccine launch is imminent.

According to Bloomberg on the 11th (local time), the FTSE Global Index, based on stock indices from 48 countries worldwide, stood at 371.98 on that day, marking a 47% increase since the March low. Major foreign media reported, "For the first time since the wave of sell-offs in the global stock markets at the end of February due to COVID-19, the market has entered positive territory." It also approached the year's highest point of 383.39 recorded on February 12.

The U.S. New York Stock Exchange led the global stock market rally. Although the Dow Jones Industrial Average, S&P 500, and Nasdaq closed lower than the previous day, they maintained strong gains until early trading. The S&P 500 index rose to 3381 in the morning, closely approaching the all-time high of 3393 recorded in February. This marks an increase of more than 1100 points compared to late March when COVID-19 spread rapidly in the U.S. Notably, the decline at the close was decisively influenced by concerns from Mitch McConnell, the Republican Senate Majority Leader, that negotiations on additional economic stimulus measures by the Donald Trump administration could be prolonged, leaving room for a rebound if the deal is reached.

The pan-European Euro Stoxx 50 index also closed up 2.22% at 3332.12. Although about 14% lower than this year’s peak (3865.18 on February 19), it rose nearly 40% from its low point. Germany’s DAX 30 index, Europe’s largest economy, closed up 2.04% at 12,946.89. This was largely influenced by the August economic sentiment index of 71.5 released by Germany’s private economic research institute, the Centre for European Economic Research (ZEW), which significantly exceeded market expectations of 54.5.

Analysts at Brown Brothers Harriman & Company, a U.S. private bank, mentioned U.S.-China tensions and the spread of COVID-19, analyzing that "the market seems increasingly desensitized to factors generally interpreted negatively." Despite recent reports of COVID-19 resurgence in various parts of Europe such as France, Spain, and Greece, most indices rose more than 2% that day, reflecting improved economic outlooks.

Gold prices, which had been rising alongside the stock market, fell sharply that day. This was influenced by news of Russia’s COVID-19 vaccine development and a significant rise in U.S. Treasury yields, another safe-haven asset. On the New York Mercantile Exchange, December delivery gold closed at $1,946.30 per troy ounce, down 4.6% ($93.40) from the previous day. It fell below the $2,000 mark for the first time in five trading days, marking the largest decline in dollar terms since April 15, 2013, in seven years. The U.S. 10-year Treasury yield, which had recently approached an all-time low, rose to 0.65%, the highest level in a month. German bond yields also increased.

The Wall Street Journal (WSJ) reported that some analysts believe companies are relatively protected from the economic damage caused by the COVID-19 pandemic. Bruce Bittles, Chief Investment Strategist at Baird & Company, said, "There is growing confidence that the economy is recovering faster than a few months ago and that the damage from the COVID-19 resurgence will be less severe than feared."

This content was produced with the assistance of AI translation services.