LONDON – Oil prices dived on Thursday on demand fears as more nations go into lockdown to staunch the spread of the coronavirus, while stock prices enjoyed a reprieve.
Both main oil contracts fell 5%, extending this week's meltdown to plumb four-month lows on virus-driven demand fears.
"The new lockdowns have since yesterday caused a carnage in the oil market," Bjornar Tonhaugen, head of oil markets at Rystad Energy.
"Oil demand will lose ground as a result of the new lockdowns... Prices now naturally decline on this grim prospect," he added.
Meanwhile, stocks were spared Wednesday's bloodbath which saw losses of more than three percentage points in several major markets.
Wall Street opened mixed after data showed the US economy posting the strongest recovery on record as it expanded at an annual rate of 33.1% in the third quarter, according to government data.
However, compared to the July-September of 2019, the third quarter contracted 2.9% after falling 9.0% year-over-year in the second quarter, according to the data.
The Dow shed 0.2% as trading began.
In early afternoon deals, European stocks slid and the euro sagged as the European Central Bank kept rates steady as expected, although it said it stands ready to bolster its pandemic response in December.
European equities were hammered Wednesday as the German and French governments unveiled tighter restrictions to curb soaring Covid-19 infection rates.
The moves followed weeks of exponentially rising new infections across Europe that forced governments across the continent to put fresh containment measures in place.
Double-dip recession risks
The deadly second wave could potentially spark another painful global recession, as businesses and economies buckle once more under the restrictions, analysts warn.
"Risks of a double-dip recession are rising for the global economy," warned Agathe Demarais, global forecasting director at The Economist Intelligence Unit.
"A second wave of the coronavirus pandemic is raging across Europe, prompting several countries, including heavyweights France and Germany, to re-impose stringent measures to contain the outbreak," she told AFP.
In tumultuous Wednesday trade, Frankfurt stocks dived more than 4%, while London and Paris each slumped by around 3%.
"Looking ahead, the prospects for the global economy have darkened for the rest of the year," Demarais added.
"Many major economies will likely see their GDP contract on a quarterly basis in October-December. In turn, the recovery... will take even longer than planned."
Corporate earnings
In London on Thursday, investors shrugged off news that British bank Lloyds and oil giant Royal Dutch Shell both rebounded into profit in the third quarter.
Paris digested news that European aircraft maker Airbus flew into the losses on exceptional charges linked to the deep job cuts, as virus fallout ravaged the aviation sector.
Frankfurt was partly helped by news that German auto giant steered back into profit in the same period, after negotiating pandemic fallout. – AFP, October 29, 2020
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