It was as if someone forgot to hit snooze on the covid-19 wakeup call. Months of warning signs and buried fears struck at once on Monday, the market buckling under the threat of another round of national lockdowns.
Though most of the headlines have been focused on Europe, the United States is having its own nightmare. To say the country is heading into a difficult period is an understatement. There’s no bipartisan fiscal stimulus in sight, an already heated election just got all the more intense following the death of Ruth Bader Ginsburg, and covid-19-related deaths are fast approaching 200,000, while daily cases creep up towards 50k.
Faced with all, it’s hardly a surprise that the Dow Jones, already stalled, went into a screeching reversal. Sinking 3%, or 800 points, the Dow is now barely above 26,800, its worst price since the first few days of August and around 2400 points adrift of its early-Septembers highs.
Percentage-wise, the Dow’s losses were limited when compared to Europe. The FTSE shed 4%, taking it below 5800, its lowest level in over 4-months. The CAC was down 4.2%, somehow not the day’s worst performer despite France seeing a record 13,500 cases in a single day. And the DAX plunged 4.9%, diving towards 12,500, like the Dow striking a 7-week nadir.
As for the forex markets, the dollar was a big winner, its safe haven allure drawing in investors and causing the pound and euro to fall 1% apiece. Gold, meanwhile, lost out, shrinking by 3.5% to $1890 per ounce.
Will this be a moment of fearful catharsis for the markets, a much-needed correction before a rebound? Or is it the start of a more prolonged decline, as the West properly enters the second wave of the coronavirus pandemic? Much may be dictated by where the Dow Jones ends up closing this evening.
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