Momentarily granted some relief thanks to Tuesday’s largely better than forecast flash PMIs, Europe cliff-dived back into the red on Wednesday as the covid-19 situation in the US grew increasingly grim.
In the last 24 hours 7 states have reported record coronavirus hospitalisations – Arizona, Arkansas, California, North Carolina, South Carolina, Tennessee and Texas. The Lone Star state also saw an all-time high case increase on Tuesday, something that has become almost a daily occurrence.
It is a damning indictment of the Trump administration, and its laissez-faire attitude towards the pandemic from the off. This isn’t a second wave, but rather a continuation of the first.
Understandably investors were rather worried about this news, especially since it follows on from the recent outbreak in Beijing, a new cluster of cases in Tokyo, a record one-day total for new cases in Mexico and Monday’s reports that Germany’s R rate has crossed the crucial 1 level due to 1000s of cases at an abattoir.
That’s because whatever fragile signs of recovery were observed in Tuesday’s manufacturing and services PMIs would be wiped out if a substantial ‘second wave’ were to materialise.
It may feel like in the UK that, following Boris Johnson’s announcement of a large swathe of lockdown-easing measures from July 4th, we are out the other side of the pandemic. All evidence would suggest that isn’t the case.
In response the FTSE sank 1.9%, barrelling back towards 6200 after its brief foray above 6300 (a regular ceiling for the index in the second half of June). The DAX fell by the same amount, nearing 12300 in the process, while the CAC dropped 1.7% as it desperately tried to cling onto 4900.
As for the Dow Jones, it is facing a 0.8% decrease when trading starts stateside, a decline that would force it below 25950.
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