For long stretches of the last few months, the markets have chosen to forget the fact we’re still, very firmly, in the middle of a pandemic. Well, they woke up in the real world on Monday...
With cases sharply rising across Europe, including a fresh daily record of 13,500 new infections for France and numbers regularly around the 4000 mark in the UK, it seems like the continent is entering – or more likely has entered – its second wave. And with that comes the increased chance for another round of nationwide lockdowns.
The prospect of such, and the cost associated, has sent the markets into a spiral – even if there is no reason why the losses should be so pronounced today when compared to any point last week. It seems that headlines have simply reached a tipping point in the eyes of investors.
In the UK, the warning that the country is at a ‘critical point’ and is ‘heading in the wrong direction’ has sent the FTSE 170 points lower, leaving the index at 5850 for the first time in a fortnight. With its hospitality and services stocks coming under heavy fire, the FTSE 250 was even worse, sinking 3% after the bell.
These losses were echoed by the Eurozone indices. The DAX dropped 350 points, barely clinging on above 12800, while the CAC was down 2.3% and the wrong side of 4870. It’s perhaps surprising the French index isn’t the session’s worst performer, though it did take a nasty tumble on Friday.
In the US fresh cases keep approaching 50,000, while the number of deaths has now crossed 200,000. Yet, if the futures are anything to go by, American investors aren’t quite as fearful as their European peers – the Dow Jones is set to fall a comparably light 1.2%, sending it back towards 27300.
It’ll be interesting to see whether those losses accelerate once the bell rings on Wall Street, especially since every day that Congress fails to agree on a new fiscal stimulus plan, the US economic recovery is further endangered.
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