As should’ve been obvious, the market’s post-Monday rebound has proven to be naïve and, ultimately, temporary, with the European indices skidding lower following a 500-point-plus plunge from the Dow Jones last night.
Led by its tech sector the Dow (NYSE:DOW) sank to a fresh 7-week nadir of 26750, as investors expressed their concerns over the lack of a covid-19 spending plan – and with the election less than 6-weeks away, it seems unlikely one is going to materialise any time soon – a slowing recovery and an increase in daily case numbers the only way they know how.
This fear bled into the European open, causing every major (and minor) index to start Thursday in the red.
With covid-19 cases up a quarter in the space of 24 hours on Wednesday, whatever relief the FTSE felt at Boris Johnson’s soft-touch fresh restrictions was erased by the knowledge that tougher measures are almost an inevitability at this point. Dropping 1.2% it returned to the wrong side of 5850, with the FTSE 250 slipping by the same amount.
One thing that could aid the UK index is Rishi Sunak’s ‘Winter Economy Plan’, reportedly aimed at reducing further unemployment in the coming months. Then again, the day’s losses are so generalised it might take the Chancellor announcing something really big this Thursday to make the FTSE listen. Worse case scenario for the index that the pound gets the post-plan rub, exacerbating the FTSE’s already nasty losses.
In the Eurozone, the CAC slumped by 1%, sinking to 4750, with the DAX down 0.8% to 12550. This comes after Wednesday’s flash PMIs showed the services sector in both countries has started to contract once again in September.
As for the Dow itself, currently the futures are pencilling in a rather flat open, unchanged from yesterday’s 27650 close.
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