HONG KONG • Asian markets struggled and the US dollar extended losses yesterday on data showing the US economy suffered its worst quarter on record, while a tweet from President Donald Trump suggesting delaying the November election also jolted investors.
The figures from Washington added to fears about the long-running economic impact of Covid-19 and overshadowed a better-than-forecast read on Chinese factory activity that suggested China is slowly emerging from the pandemic crisis.
Wall Street's S&P 500 and Dow dropped following the dour US readings, while Frankfurt led steep losses in Europe after Germany announced that the region's biggest economy suffered a historic 10 per cent contraction.
Tokyo yesterday lost 2.82 per cent and Sydney 2.04 per cent, while Seoul and Taipei were also in the red. Singapore was closed for a public holiday.
Hong Kong dipped 0.47 per cent but Shanghai edged up after China said its closely watched Purchasing Managers' Index on manufacturing improved for the second straight month.
The already struggling US dollar took another step down across the board following the data.
The euro, helped by last month's massive European Union stimulus deal, built on its recent advance to sit at highs not seen since May 2018, while the yen - a traditional go-to unit in times of turmoil - was at its strongest level since March.
The US Federal Reserve's massive easing programme, which has driven interest rates to zero, has played a key role in the US dollar's weakness, with high-yielding currencies such as the Australian dollar, South Korean won and Mexican peso also benefiting.
And expectations are for the greenback to continue to flail, with lawmakers in Washington unable to find common ground on a new support package.
AxiCorp's chief global market strategist Stephen Innes said: "There is little reason for the dollar to recover in an environment where more and more investors in accelerating fashion throw aside the previously established assumption that the US will lead the recovery to global economic nirvana."
Traders were also rattled by Mr Trump's suggestion that the election should be delayed owing to the risk of fraud by mail-in votes.
While he would be unlikely to get the support of both houses of Congress, the outburst pricked investors' ears.
Mr Ray Attrill of National Australia Bank said: "The mere suggestion by Trump of a delay nevertheless does play to concerns that the election result will be challenged in November and that, because of the likely larger-than-usual share of votes via mail-in ballots due to the pandemic, we might not know the result on election night itself."