Stocks tumble as lockdown fears grip investors

Reuters | London

The Daily Tribune - www.newsofbahrain.com

Shares around the world tumbled on Wednesday as coronavirus infections grew rapidly in Europe and the United States, igniting fears of possible strict lockdown measures that could damage already fragile economic recoveries.

European shares.STOXX fell on reports of potential lockdowns in Germany and France, losing 2.5% to hit five-month lows, rattled by a media report that France might bring in a national lockdown from midnight on Thursday.

The Paris index .FCHI was among the hardest hit, losing 3.5% to touch its lowest since May.

German shares GDAXI. slumped 3.2% to their lowest since June, after a report Chancellor Angela Merkel wanted to close restaurants and bars to curb new infections.

In Europe, automakers .SXAP and banks .SX7P led the losses, falling 4.2% and 3.9% respectively.

Wall Street futures ESc1YMc1NQc1 lost 1.3-1.6%.

The United States, Russia, France and others have seen record numbers of infections in recent days, with European governments introducing new curbs that investors fear could maul the already fragile recoveries

“The appetite of the different countries’ authorities to enforce new lockdowns - that’s the point of discrimination between good market performance and bad market performance,” said Alessia Berardi, senior economist at Amundi.

“The second wave is now clearly very strong in Europe.”

The MSCI world equity index .MIWD00000PUS, which tracks shares in 49 countries, fell 0.6%.

Asian shares lost ground after initially showing some resilience, in part due to more limited COVID-19 outbreaks and better recoveries in the region’s major economies.

MSCI's ex-Japan Asia index .MIAPJ0000PUS lost 0.1%, turning negative even after China .CSI300 and South Korea .KS11 made gains.

The concerns over a second wave of infections played out in currency and bond markets, too, with the euro EUR=EBS slumping 0.4% against the dollar. German government bond yields DE10YT=RR hit their lowest since March.