LONDON – European stock markets tanked Wednesday as investors braced for the apparently imminent introduction of tighter lockdown measures to combat soaring coronavirus infection rates, dealers said.
In early afternoon deals, Frankfurt and Paris stocks shed about 3%, while London lost 1.7% near midday, with sentiment plagued by an alarming surge in Covid-19 cases in Europe and the United States – and a spike in deaths.
The euro dived against the dollar ahead of economically-damaging restrictions expected in France, Germany and elsewhere, while oil prices spiralled lower on deepening demand fears.
French President Emmanuel Macron will address the nation this evening to present tougher restrictions as doctors warned many hospitals are just days away from being overrun with patients.
Media speculation is rife that Macron will announce a second lockdown, one day after officials announced 523 coronavirus deaths in 24 hours – the highest daily toll since April.
'Grim'
"Grim. That’s the only word that can describe the markets on Wednesday," said Spreadex analyst Connor Campbell.
"Investors' Covid-19 fears (are) attacking stock prices in ways not seen since the start of the Western phase of the pandemic back in March.
"They are not wrong to be worried. Emmanuel Macron is likely to announce a month-long national lockdown in France."
German Chancellor Angela Merkel is also seeking drastic new curbs, including fresh shutdowns hitting leisure, sports and the food and drink sectors, in crisis talks with Germany's regional leaders.
The upsurge in coronavirus fears comes as investors have essentially given up on the chances of a new stimulus package out of Washington.
With US lawmakers unlikely to agree any new rescue package before Tuesday's presidential election, analysts said the new wave of virus infections and lingering uncertainty over the vote mean equities will face a wobbly few days.
Some experts have already warned of a double-dip recession as new restrictions choke off the recovery seen in the third quarter of the year.
'Double whammy'
"The double whammy of fears of further lockdowns crimping any tentative economic recovery in the UK and Europe, and a follow through of overnight weakness from the US based partly on the lack of further stimulus, have had a negative impact on investor sentiment," Interactive Investor analyst Richard Hunter told AFP.
The impact of this year's lockdowns and travel restrictions was laid bare Tuesday as the World Tourism Organization said the business had collapsed 70%, leading to a US$730 billion (RM3 trillion) loss in revenues, while the UN's trade body said foreign direct investment was likely to slump 40%.
The Dow and S&P 500 both fell again, although the Nasdaq edged up as traders bet tech firms will benefit from people being forced to stay home.
The retreat extended into Asia but markets there, pared or reversed losses as the day wore on. – AFP, October 28, 2020
