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European and US markets battered as coronavirus surges

The euro dived against the dollar while oil prices tumbled on deepening demand fears, with the main US contract down more than 5.0 percent.

Published: 28th October 2020 09:37 PM  |   Last Updated: 28th October 2020 09:37 PM   |  A+A-

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For representational purpose. (Photo | PTI)

By AFP

European and US stock markets tanked Wednesday while oil prices plunged as investors braced for the apparently imminent introduction of tighter lockdown measures to combat soaring coronavirus infection rates, dealers said.

In afternoon deals, Frankfurt was down 4.5 percent and Paris stocks shed 4.2 percent, while London lost 3.1 percent, with sentiment plagued by an alarming surge in Covid-19 cases in Europe and the United States -- and a spike in deaths.

Wall Street's main indices also slumped, with the Dow down 3.1 percent in late morning trade.

More than 500,000 new coronavirus cases were reported worldwide on Tuesday in a new record, according to a tally compiled by AFP.

The euro dived against the dollar while oil prices tumbled on deepening demand fears, with the main US contract down more than 5.0 percent.

French President Emmanuel Macron will address the nation this evening to present tougher restrictions as doctors warned many hospitals are just days away from being overrun with patients.

Media speculation is rife that Macron will announce a second lockdown, one day after officials announced 523 coronavirus deaths in 24 hours -- the highest daily toll since April.

- 'Grim' -
"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. Emmanuel Macron is likely to announce a month-long national lockdown in France."

German Chancellor Angela Merkel is also seeking drastic new curbs, including fresh shutdowns hitting leisure, sports and the food and drink sectors, in crisis talks with Germany's regional leaders.

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.

Some experts have already warned of a double-dip recession as new restrictions choke off the recovery seen in the third quarter of the year.

- 'Double whammy' -
"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 Tuesday as the World Tourism Organization said the sector had seen a 70 percent collapse in business, leading to a $730 billion loss in revenues, while the UN's trade body said foreign direct investment was likely to slump 40 percent.

"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.

"There is an ample basis for buyers to keep to the sidelines, creating lower bids that have the potential to feed even lower prices," he added.

- Key figures around 1500 GMT -
London - FTSE 100: DOWN 3.1 percent at 5,537.29 points

Frankfurt - DAX 30: DOWN 4.5 percent at 11,084.22

Paris - CAC 40: DOWN 4.2 percent at 4,532.34

EURO STOXX 50: DOWN 4.2 percent at 2,941.66

New York - Dow: DOWN 3.1 percent at 26,603.99

Tokyo - Nikkei 225: DOWN 0.3 percent at 23,418.51 (close)

Hong Kong - Hang Seng: DOWN 0.3 percent at 24,708.80 (close)

Shanghai - Composite: UP 0.5 percent at 3,269.24 (close)

Euro/dollar: DOWN at $1.1743 from $1.1796 at 2100 GMT

Dollar/yen: DOWN at 104.26 yen from 104.42 yen

Pound/dollar: DOWN at $1.300 from $1.3044

Euro/pound: DOWN at 90.31 pence from 90.43 pence

West Texas Intermediate: DOWN 5.7 percent at $37.33 per barrel

Brent North Sea crude: DOWN 4.9 percent at $39.20 per barrel



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