Mon, 03-Aug-2020
Thursday 25 Jun 2020 , 10:18 am

Global Stocks Sapped by Coronavirus Surge, Recession Gloom

In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday. Seven other states had record highs earlier this week and Australia posted its biggest daily rise in infections in two months.
By SIN Bureau
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World stocks spluttered to their lowest level in over a week on Thursday, as a surge in U.S. coronavirus cases and an IMF warning of a nearly 5% plunge in the global economy this year hit the bulls again.

Asia had suffered its biggest drop in eight sessions overnight and Europe’s STOXX 600 fell almost 1% to add to the 3% drubbing it had taken the previous day, albeit following a red-hot few months.

Nerves were rising again about the impact of COVID-19.

In the United States, Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday. Seven other states had record highs earlier this week and Australia posted its biggest daily rise in infections in two months.

The governors of New York, New Jersey and Connecticut ordered travellers from eight other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.

Disney has delayed the re-opening of theme parks and resorts in California, and Texas is facing a “massive outbreak” and considering new localised restrictions, its governor said.

“During the swift rebound since the March lows, equity markets may have gotten a little ahead of themselves,” wealth manager DWS said in a quarterly Chief Investment Officer report.

Wall Street S&P 500 futures had also buckled below a key technical level known as the 200-day moving average, leaving investors huddling in traditionally safer government bonds and gold.

The International Monetary Fund said on Wednesday it now expects an even deeper global recession, with output likely to shrink 4.9% this year rather than the 3% contraction it had predicted in April.

“There is a little bit of reality bites coming,” said Damian Rooney, senior institutional salesman at stockbroker Argonaut in Perth. “I don’t think there was a particular straw that broke the camel’s back, but people are a little bit twitchy – there are a lot of reasons to be pretty cautious.”

In the currency markets, the dollar clung on to broad gains which had lifted it from near a two-week low.

Yields on benchmark 10-year U.S. Treasuries sank to a 10-day low of 0.6692% and those on German Bunds — Europe’s benchmark safe asset — dipped to -0.453% although that remained within a well-worn recent range.

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Neha Mule

Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.

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