Global markets had a pallid end of week hue Friday as investors fretted over renewed coronavirus restrictions, the stuttering global economic recovery, and US lawmakers’ failure to agree on new stimulus measures.
In Europe, London, Frankfurt and Paris stocks all lost ground after a lacklustre lead from Asia while the Dow was flat two hours into the week’s final session.
World oil prices held the line having initially received a small fillip after Saudi Arabia pressed OPEC and its allies to comply fully with production cuts to help stem this year’s virus-driven losses.
But it is the ongoing health crisis which continues to spook investors as the Covid-19 pandemic shows no sign of easing, a swathe of fresh spikes around the world prompting the reimposition of fresh containment measures including lockdowns.
“Coronavirus dominated the session,” said Connor Campbell, analyst with Spreadex, seeing a raft of new restrictions notably in northeastern England as penalising an index where IAG, owner of British Airways, gave up 14.6 percent as the virus hammers the aviation industry.
Britain’s government warned it could impose further restrictions across England to combat rising infections, noting hospitalisation rates are doubling every eight days.
France has been seeing virus deaths trend upwards and hospital admissions rise, meanwhile, while Spain’s capital Madrid demanded government action as the virus threatened to overwhelm the city.
“The threat of a second round of Covid-19 restrictions … has dented confidence, with the travel sector in particular feeling the heat as we head into the weekend,” said Joshua Mahony, senior market analyst at online trading firm IG.
Traders are now growing increasingly worried about how long it will take to get the world economy back on track, amid reports England could impose two weeks of restrictions in October.
In London, virus concerns overshadowed upbeat official data showing that British retail sales continued their recovery in August.
The Bank of England had indicated Thursday that it was preparing the ground for a possible policy of negative interest rates to kickstart the battered UK economy.
Trillions of dollars in government and central bank cash have provided much-needed support to economies — particularly equity markets — and none more so than in the United States.
With the first massive US rescue package having run its course and Federal Reserve monetary policies such as record-low interest rates having limited effect, pressure is growing on Congress to offer more help, with the head of the central bank leading the calls.
But there is little hope that Republicans and Democrats are anywhere close to reaching a compromise after weeks of bickering.
With nearly 30 million Americans receiving government help, observers said there was growing concern about the impact on the crucial consumer sector that drives the world’s top economy.
While the Fed essentially said Wednesday that interest rates would remain low for at least three years, analysts said that the pledge had disappointed those hoping for more stimulus.
US-China tensions meanwhile were once again in focus as Washington ordered a ban on downloads of popular Chinese-owned video app TikTok and use of the messaging and payment platform WeChat, saying they threaten national security.
New York – Dow Jones: FLAT at 27,890.24 points
London – FTSE 100: DOWN 0.7 percent at 6,007.05 (close)
Frankfurt – DAX 30: DOWN 0.7 percent at 13,116.25 (close)
Paris – CAC 40: DOWN 1.2 percent at 4,978.18 (close)
EURO STOXX 50: DOWN 0.7 percent at 3,293.09
Tokyo – Nikkei 225: UP 0.2 at 23,326.00 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 24,455.41 (close)
Shanghai – Composite: UP 2.1 percent at 3,338.09 (close)
Euro/dollar: UP at $1.1859 from $1.1846 at 2100 GMT
Pound/dollar: DOWN at $1.2946 from $1.2971
Euro/pound: UP at 91.58 pence from 91.33 pence
Dollar/yen: DOWN at 104.42 yen from 104.55 yen
West Texas Intermediate: UP 0.6 percent at $41.23 per barrel
Brent North Sea crude: DOWN 0.1 percent at $43.27 per barrel