Equities slide once more on second wave fears

LONDON — Equities slid on Monday, extending last week's losses on fears that a second wave of virus infections could spark fresh lockdowns and snub out economic recovery.

"Markets around the world have sold off again on heightened fears around a second wave of coronavirus infections and deaths," said Investment Director Russ Mould at stockbroker AJ Bell.

Tokyo tumbled to a loss of 3.5 per cent by the close, Hong Kong slid 2.2 per cent and Shanghai lost 1 per cent on signs that the deadly COVID-19 disease has returned in China amid a resurgence in the United States.

Stocks in Europe dived more than 2 per cent at the open, but later trimmed their losses, as European nations press ahead with easing their strict lockdowns.

Oil prices also extended last week's losses on fears that a second wave could ravage demand for the commodity.

Under pressure 

"It seems a combination of a new spike in COVID-19 cases in Beijing and disappointing Chinese data is weighing on sentiment at the start of the week," noted analyst Craig Erlam at trading firm OANDA.

"The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we are seeing in the markets."

Beijing has carried out mass testing and locked down several neighbourhoods after 79 cases were linked to a single wholesale food market in the capital. City official Li Junjie on Monday said cases had also been found at another market.

The city has raced to quash the new outbreak, closing the affected markets, deploying paramilitary police and putting nearby housing estates under lockdown.

That came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome and Tokyo have also seen fresh spikes.

"It means the virus hasn't lost its infectiousness, it isn't weakening... we shouldn't let down our guard," World Health Organisation Deputy Director Ranieri Guerra told Italian journalists.

AxiCorp analyst Stephen Innes warned that new US infections could be an ominous sign for markets.

"Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge."

"However, rising new daily COVID-19 cases in two of the three most populous states in the US will test that resolve."

Despite the latest equity losses, global stock markets have soared up to 50 per cent from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus by governments and central banks.

On Monday in Europe, Germany, Belgium, France and Greece reopened their borders to EU countries from Monday. Austria will follow on Tuesday and Spain on Sunday.

France on Monday allowed cafes and restaurants to serve customers inside, as well as on terraces.