Fri, 30 Oct 2020

Global stock markets tanked Thursday as investor sentiment was hammered by fears that tightening coronavirus restrictions could derail a tentative economic recovery.

London equities were down more than 2% two hours out from the close after the UK government announced the British capital will face more stringent coronavirus restrictions because of a rising number of cases.

Paris suffered a similar drop after the French government imposed a curfew in its capital and eight other cities - covering almost a third of the country's population - for as long as six weeks.

And Frankfurt stocks dived 2.8% after Germany also ramped up Covid-19 restrictions.

Across the Atlantic, Wall Street sentiment was not helped by Labour Department news that new applications for US jobless benefits unexpectedly rose last week to 898,000.

The 53 000 increase from the prior week was the sharpest rise in seasonally adjusted initial claims in two months as the United States attempts to recover from mass layoffs caused by virus-related business shutdowns earlier this year.

The Dow fell around 1% shortly after opening with Apple and Tesla notably losing ground.

Asian markets had earlier closed well into the red.

"Renewed health concerns and tighter restrictions around Europe are hammering stocks," said CMC Markets analyst David Madden.

"Dealers are dumping stocks for fear that economic activity will drop off because of the tighter restrictions in various parts of Europe."

"The latest restrictions are likely to hamper Europe's economic recovery - which was already running out of steam before the health woes ramped up again," added Madden.

The pound meanwhile struggled ahead of a European Union summit where leaders will discuss post-Brexit trade talks, with Prime Minister Boris Johnson urging them to give ground or see Britain walk away with no deal.

Oil prices also faltered, losing more than three percent.

'Far apart' on stimulus

Equities have been getting support in recent weeks as investors believe Republicans and Democrats will eventually reach a deal on another package of measures to support the US economy.

Those hopes were dented Wednesday after US Treasury Secretary Steven Mnuchin warned that Republicans and Democrats were still "far apart" on a stimulus package before next month's presidential and congressional elections.

However, analysts said traders are taking comfort from the possibility that Joe Biden and the Democrats will win the presidency and both houses of Congress, paving the way for a bigger stimulus than anything that could be agreed before the vote.

Source: News24

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