Stock markets drop as Wall Street retreats from record highswritten by Bella Palmer
Both the Dow and the S&P 500 ended last week at new highs and also posted their fourth weekly gains in a row
Stock markets slid Tuesday after Wall Street pulled back from record levels in overnight trade and with Japan fearing a renewed Covid-19 surge.
Both the Dow and the S&P 500 ended last week at new highs and also posted their fourth weekly gains in a row, following on the heels of strong data for American housing starts, employment and retail sales.
But analysts said that a combination of some dollar weakness and a lull in fresh data ahead of upcoming corporate results had dampened enthusiasm.
It seems like investors might be having a bit of a second thought up here as US earnings season starts to heat up and peak optimism is beginning to set in, said Stephen Innes of Axi.
Investors were looking to "cash in some chips" to move back into real world assets, after more declines for bitcoin.
The Nikkei dropped two percent at the end of trade after investors took in calls for new states of emergency in the Osaka region and possibly Tokyo, prompted by rising case numbers.
The new measures could involve tougher restrictions including asking shops and restaurants to close, according to local media.
Along with increased new coronavirus infections, the possibility of a state of emergency declaration is growing, which is turning on an amber light for economic recovery, Okasan Online Securities said in a commentary.
NAB analyst Rodrigo Catril added that US dollar weakness mostly appears to be driven by European strength.
The market has become slightly more optimistic around the European vaccine rollout and economic outlook of late. As the rollout picks up, European equities should also start to outperform, he added.
Wall Street's dream run was also likely to lose momentum with an ongoing Senate battle in Washington over the size of proposed corporate tax increases and the extent of infrastructure stimulus, Catril added.
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