Virus surge, restrictions batter global markets
October 28 2020 09:40 PM
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The logo of Germany’s share index DAX is pictured at the Frankfurt Stock Exchange. The benchmark plunged 4.2% to close at 11,560.51 yesterday.

AFP/London

European and US stock markets tanked yesterday while oil prices plunged over 5% as investors braced for the apparently imminent introduction of tighter lockdown measures to combat soaring coronavirus infection rates, dealers said.
Across Europe, London’s FTSE 100 fell 2.6% to close at 5,582.80 points; Frankfurt’s DAX 30 plunged 4.2% at 11,560.51, while Paris’ CAC40 lost 3.4% at 4,571.12, with sentiment plagued by an alarming surge in Covid-19 cases in Europe and the US, and a spike in deaths.
More than 500,000 new coronavirus cases were reported worldwide on Tuesday in a new record, according to a tally compiled by AFP.
Wall Street’s main indices also slumped, with the Dow down 2.7% in midday trading, having earlier been down over 3%.
French President Emmanuel Macron was set to address the nation late on Wednesday to present tougher restrictions as doctors warned many hospitals are just days away from being overrun with patients.
Media speculation was rife that Macron would announce a second lockdown, one day after officials announced 523 coronavirus deaths in 24 hours — the highest daily toll since April.
German Chancellor Angela Merkel also unveiled drastic new curbs, including fresh shutdowns hitting leisure, sports and the food and drink sectors, just after trading ended.
“Grim. That’s the only word that can describe the markets on Wednesday,” said Spreadex analyst Connor Campbell. 
“Investors’ Covid-19 fears (are) attacking stock prices in ways not seen since the start of the Western phase of the pandemic back in March. 
“They are not wrong to be worried.”
The upsurge in coronavirus fears comes as investors have essentially given up on the chances of a new stimulus package out of Washington.
With US lawmakers unlikely to agree any new rescue package before Tuesday’s presidential election, analysts said the new wave of virus infections and lingering uncertainty over the vote mean equities will face a wobbly few days.
Meanwhile, the prospects of a double-dip recession as new restrictions choke off the recovery seen in the third quarter of the year.
“The double whammy of fears of further lockdowns crimping any tentative economic recovery in the UK and Europe, and a follow through of overnight weakness from the US based partly on the lack of further stimulus, have had a negative impact on investor sentiment,” Interactive Investor analyst Richard Hunter told AFP.
The impact of this year’s lockdowns and travel restrictions was laid bare on Tuesday as the World Tourism Organisation said the sector had seen a 70% collapse in business, leading to a $730bn loss in revenues, while the UN’s trade body said foreign direct investment was likely to slump 40%.
“If global economies aren’t going to be functioning as fully as had been hoped, for any number of reasons, then the hoped-for earnings recovery just might not live up to the currently lofty expectations,” said analyst Patrick J O’Hare at Briefing.com.
Shutdowns also dampen demand for oil, which saw prices tumble more than 5%.
“Dealers were dumping oil as they took the view that demand is likely to decline on the back of the growing health crisis,” said market analyst David Madden at CMC Markets UK.



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