Sudden move makes stock market dive

US President Donald Trump has abruptly cut off stimulus negotiations with Democrats in Congress, ending any hope of economic relief for Americans struggling amid the coronavirus pandemic until after the election.

The stock market plummeted in response to the news. The Dow closed down 1.3 per cent, the S&P 500 dropped 1.4 per cent and the Nasdaq fell by 1.6 per cent.

That is partly because the President’s announcement today came as such a surprise.

After months of stalled negotiations between House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, there had actually been positive signs in recent days.

The pair resumed their talks last week, and both sides expressed optimism. During an appearance on Face The Nation, Ms Pelosi insisted they were “making progress”.

“The talks have sped up in the last couple of days,” Republican Senate Leader Mitch McConnell said on Friday.

“I think we’re getting closer to an outcome.”

On Saturday, The Washington Post reported White House officials had “expressed confidence” that the outline of a deal could be done by the middle of this week.

And Mr Trump himself was still demanding a deal as recently as Saturday, after he had been diagnosed with the coronavirus.

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OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!

— Donald J. Trump (@realDonaldTrump) October 3, 2020

Today, the President lost patience.

In a series of tweets, Mr Trump accused Ms Pelosi of “not negotiating in good faith” and announced that he had instructed Mr Mnuchin to cease negotiations until after the election on November 3.

“Nancy Pelosi is asking for $US2.4 Trillion to bail out poorly run, high crime Democrat States, money that is in no way related to COVID-19,” Mr Trump said.

“We made a very generous offer of $1.6 Trillion and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of our Country.

“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.

“I have asked Senate Majority Leader Mitch McConnell not to delay, but to instead focus full-time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett.

“Our Economy is doing very well. The Stock Market is at record levels, JOBS and unemployment also coming back in record numbers. We are leading the World in Economic Recovery, and THE BEST IS YET TO COME!”

As always, all those capitalisations are Mr Trump’s, not mine.

America’s unemployment rate currently stands at 7.9 per cent, which is significantly better than the 14.7 per cent it reached at the height of the crisis.

But there are still almost 11 million fewer jobs now than there were in February, when the pandemic started to hit.

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