Stocks slide as virus, US uncertainties fan fears

LONDON — European and Asian stock markets tumbled on Thursday following another sharp sell-off overnight on Wall Street as investors reacted to rising virus infections, new lockdowns, a slowing economic recovery, stalled US stimulus talks and American election uncertainty.

Months of mind-boggling gains in global equities have come to a juddering halt this month, and expectations are fading that a wall of cash from governments and central banks will jump-start a rebound.

"Markets are digesting and grappling with this idea that the growth expectations that investors have might not materialise," said Lauren Goodwin, at New York Life Investments.

"As the fiscal impulse in the US starts to wane, some of these expectations for a slow and steady recovery are shaken."

With the northern hemisphere now moving into autumn and winter, there are worries that a second wave of coronavirus will see the reimposition of strict, economically devastating containment measures.

France became the latest European country to act, shutting bars and restaurants in the second-biggest city Marseille and putting it on "maximum alert", while several others, including Paris, will see new restrictions, including limitations on public gatherings and earlier closing hours.

Britain's government has also shortened opening hours and has warned of other measures, while the Madrid region has locked down roughly 850,000 people and plans to extend its curbs.

The International Labour Organisation found that by mid-year, global working hours had declined 17.3 per cent from December -- equivalent to nearly 500 million full-time jobs, which its chief Guy Ryder called "catastrophic".

US traders are now growing concerned that rising infections at home could see similar moves, and several Federal Reserve officials including boss Jerome Powell have called for a new stimulus package to mitigate the impact.

But with politicians on Capitol Hill still at a standstill, hope for a deal is waning, particularly with a presidential election just around the corner.

"A procession of US Federal Reserve speakers voiced more concerns about the ongoing impasse on additional fiscal stimulus," said AxiCorp's Stephen Innes.

Economy in 'deep hole' 

But he said Fed vice chair Richard Clarida's warning that while the economy was seeing improvement, it was still in a "deep hole", would strike fear into traders.

"Clarida's messaging provides the most distinct read on the global economy. Inferring the world has probably just seen the bounce from a sudden stop, not a cyclical recovery but merely a restart," Innes added.

Michael Hewson at CMC Markets said: "The main problem the Fed has is that US politicians appear more interested in fighting an election campaign than helping to pass a new stimulus plan which would help the American people."

All three main indices in New York saw steep losses on Wednesday, resuming a retreat that has characterised September.

The tech-heavy Nasdaq led the way, tanking more than three per cent after the Trump administration unveiled legislation aimed at limiting the liability shield of online services for content they host. 

The Justice Department said the proposal was aimed at reforming a law that protects internet services from liability from third-party content.

The losses flowed through to Asia again.

Market unease was increased by fears of an extended battle over the US presidential election result, with Donald Trump refusing to guarantee a peaceful transfer of power should he lose to Joe Biden.

"Well, we're going to have to see what happens," he said in response to a reporter's question. 

Trump, who is behind in the polls against Democrat Biden, has frequently claimed mail-in ballots are vulnerable to mass fraud and that election officials are being encouraged by Democrats to rig the election, though there is no evidence postal voting has ever led to significant fraud in the past.