HONG KONG, Aug 5, 2020 (AFP) - Nervous investors struggled Wednesday following the previous day’s rally with US lawmakers still unable to thrash out a key new stimulus package, and the White House and China agreeing to review their much-vaunted trade deal.
Long-running uncertainty about the global economic outlook caused by the coronavirus and a weak dollar helped push gold to new records after breaking the $2,000 barrier for the first time, while Europe is bracing for a second wave of infections.
With key unemployment benefits and a ban on evictions already lapsed for millions of Americans, Republicans and Democrats remain far apart in talks on a fresh economic rescue package.
House Leader Nancy Pelosi has warned the Democrats will not budge from their $3 trillion plan, which includes an extension of a $600-a-week supplementary benefit. The Republicans’ $1 trillion proposal sees that handout slashed to $200.
“Failure to agree to another round of stimulus would hit the US economy hard at a time when high-frequency data suggests it is losing some momentum,” said National Australia Bank’s Tapas Strickland.
But while the two parties appear unable for now to come together on a deal crucial to prevent a financial meltdown, there is an expectation that with an election three months away, they will eventually meet somewhere in the middle.