- Share markets around the world have taken an early plunge this week following a surge in COVID-19 cases across the United States and Europe
- Daily U.S. infections hit an all-time high, reaching 83,700 cases over the last few days, thoroughly surpassing previous records set in July
- The rise in cases drove key global markets down, with the S&P500, Dow Jones and Nasdaq all recording notable drops on Monday
- Talks of a delayed U.S. stimulus package also caused a drop among markets as lawmakers accused each other of “moving the goalposts”
- Italy and Spain both unveiled tighter restrictions over the weekend, casting doubt on a near-term economic recovery
- Medical experts in France claim the country has “lost control of the epidemic” as daily cases reach more than 52,000
Share markets around the world have taken an early plunge this week as rising coronavirus cases in the United States and Europe cloud the global economic outlook.
Daily infections in the U.S. hit record levels over the last few days, coming in at roughly 83,700 — far surpassing previous records set in July.
While the fatality rate has remained relatively stable, medical experts suggest that changes in the number of deaths tend to lag behind changes in the number of infections by approximately two weeks.
Speculation regarding a further delayed U.S. stimulus package also took a toll, driving the S&P500 down 2.22 per cent as House Speaker Nancy Pelosi and White House chief of staff Mark Meadows accused each other of “moving the goalposts” when it came to negotiations.
Likewise, the Dow Jones fell 2.67 per cent yesterday, while the NASDAQ was down 1.99 per cent.
“The decreasing likelihood of U.S. fiscal stimulus pre-election, possibly even pre-year-end, as well as worsening virus numbers and increasing lockdown measures, all seem to be taking the shine off what was a rather complacent market view of the outlook,” said James Athey, investment director at Aberdeen Standard Investments.
Across the Atlantic, Italy and Spain both unveiled tighter mobility restrictions over the weekend, while Dr Eric Caumes, head of the infections and tropical diseases department at Paris’ Pitie-Salpetriere Hospital, said France has “lost control of the epidemic.”
The Euro STOXX 50 index saw a sharp fall early in the day, sliding down 2.93 per cent by the afternoon, as did Germany’s DAX, which fell 3.71 per cent. London’s FTSE 100 also dropped 1.16 per cent, while Milan’s FTSE MIB was down 1.76 per cent.
“A combination of flat COVID-19 death rates, the avoidance of stay-home national lockdowns, and the prospect of more government support is keeping a floor under markets,” said Jasper Lawler, head of research at London Capital Group.
Investor sentiment was also hit by a survey showing that German business morale fell in October for the first time in six months.
All this aside, reports of progress in a COVID-19 vaccine currently under development by the University of Oxford and manufactured by AstraZeneca helped to prevent any further market sell-offs.