European and US stocks battered as virus surges

LONDON — European and US stock markets tanked on 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 per cent and Paris stocks shed 4.2 per cent, while London lost 3.1 per cent, 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 per cent 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 per cent.

France was expected to present tougher restrictions as doctors warned many hospitals are just days away from being overrun with patients.

Media speculation was rife that France would 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”. 

French President Emmanuel Macron is likely to announce a month-long national lockdown in France, he added.

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 said.

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 per cent 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 per cent.

“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.