GLOBAL MARKETS-Stocks wobble after Mnuchin pulls plug on Fed stimulus

By Swati Pandey
SYDNEY, Nov 20 (Reuters) - World financial markets stalled
on Friday as news U.S. Treasury was ending emergency loans
programmes dealt a blow to economic recovery hopes just as
California announced curfews to try and fight surging
coronavirus infections.
S&P500 ESc1 futures slipped 0.5% while Dow futures 1YMc1
fell 0.6%, cancelling out a firmer lead from a strong Wall
Street session overnight.
The dollar =USD was slightly weaker and the 10-year
Treasury yield US10YT=RR slipped to the lowest in 10 days at
0.818%. Eurostoxx futures started almost flat while London's FTSE
futures FFIc1 was up 0.25%
In Asia, Japan's Nikkei .N225 stumbled 0.5% while
Australian shares were flat. Chinese shares were little changed
while South Korea's KOSPI index .KS11 was a shade firmer.
That left MSCI's broadest index of Asia-Pacific shares
excluding Japan .MIAPJ0000PUS up 0.3%. It is up 1.5% so far
this week.
In a letter to U.S. Federal Reserve Chair Jerome Powell,
U.S. Treasury Secretary Steven Mnuchin said the $455 billion
allocated to Treasury under the CARES Act should be instead
available for Congress to reallocate. "This divide between the Treasury and the Fed risks
undermining the unwavering faith that investors have placed on
continuous policy support to help the economy weather the
pandemic," Singapore-based DBS wrote in a note.
Although the programmes were not used extensively, Fed
officials felt their presence reassured financial markets and
investors that credit would remain available to help businesses,
local agencies and even nonprofits through the pandemic
downturn.
Mnuchin's decision added to market anxiety about broader
economic growth as data shows the early fast recovery from a
historic plunge in the U.S. economy is fading, with more than 10
million who had jobs in January still out of work.
"The Fed has been one of the only sources of stability in
Washington and removing its latitude to offer support in a shaky
recovery is simply nonsensical," said Isaac Boltansky, director
of policy research at Washington-based Compass Point Research &
Trading.
"This is a distressing development that injects uncertainty
and instability into markets completely unnecessarily. How many
times will Washington trip on its shoelaces in response to this
crisis?"
Investor sentiment was also hit by data that showed COVID-19
hospitalisations across the United States jumped by nearly 50%
in the last two weeks, threatening the recovery of the world's
largest economy as cities and states began to impose lockdowns.
California on Thursday imposed a curfew on social gatherings
and other non-essential activities in one of the most intrusive
of the restrictions being ordered across the country to curb an
alarming surge in infections.
All three major U.S. stock indexes, however, got a healthy
boost overnight after Senate Democratic Minority Leader Chuck
Schumer said Republican Majority Leader Mitch McConnell had
agreed to revive talks to craft a new fiscal relief package.

A senior Democratic aide told Reuters there had been a
mid-afternoon meeting on Thursday among congressional aides that
discussed coronavirus relief and efforts to pass a $1.4 trillion
bill to keep government agencies operating beyond Dec. 11 when
current funding expires.
The Dow .DJI rose 0.15%, the S&P 500 .SPX gained 0.39%
and the Nasdaq .IXIC added 0.87%.
In currencies, the dollar index =USD was last at 92.232,
edging closer to Thursday's low of 92.236.
The euro was up at $1.1881 EUR= while the yen weakened to
103.8 per dollar JPY= . The Australian dollar gained to be up
0.2% at $0.7294 AUD=D4 .
In commodities, oil prices steadied after losses the
previous day, when concerns about coronavirus lockdowns
affecting fuel demand weighed on the market. O/R
West Texas Intermediate CLc1 was flat $41.74 a barrel.
Brent crude LCOc1 was up 10 cents at $44.30.
Gold was flat with spot prices XAU= at 1,867.3 an ounce.

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