Stock markets in the US and Europe fell sharply oas investors focused on signs that rich countries’ efforts to contain the coronavirus pandemic were foundering.
In Europe, the Stoxx 600 index lost 1.8% after heavy falls in German blue-chip stocks. In the US the benchmark S&P 500 had lost 2.2% by the middle of afternoon trading on Wall Street and the Dow Jones industrial average fell by 2.8%.
Countries across Europe have reported increasing numbers of confirmed coronavirus cases, and governments have reimposed restrictions that are expected to limit the economic recovery from the first wave of the pandemic.
As well as new restrictions in the UK and a new six-month state of emergency in Spain, France reported a record increase in the number of confirmed cases over the weekend, while the seven-day average of new cases in the US also rose to a record.
The share prices of companies in sectors most sensitive to pandemic travel restrictions fell heavily on Monday.
Aviation and aerospace shares dragged down the FTSE 100, which lost 1.2%. The biggest fall was sustained by British Airways owner IAG, which lost 7.6%. Rolls-Royce, the engineering company whose earnings are closely tied to the number of hours its jet engines are in the air, lost 7.2%.
Hotel and holiday companies also suffered. Intercontinental Hotels Group fell by 4%, while Carnival, the cruise company whose UK-listed shares were relegated to the mid-cap FTSE 250 index by the pandemic, lost 10% of its value. Tui, the Anglo-German travel company, fell by 8.9%.
In Germany the benchmark Dax equity index dropped 3.7%. The worst-hit company was SAP, the business software company, which fell by 23% after warning that it would take longer than previously expected for it to recover from the pandemic.
Bert Colijn, a senior Eurozone economist at ING, a Dutch investment bank, said that data on public transport usage gave a “strong indication that the recovery is being interrupted by the second wave” of the virus.
“The question now is whether the economy’s going into reverse on the back of the new restrictions aimed at tackling the virus,” he wrote in a note to clients. “As those measures become more strict, that prospect is looking increasingly likely.”
On top of the pandemic, investors are nervously awaiting the outcome of the US presidential election on 3 November, as well as the result of talks between the Democratic and Republican parties which could result in a new round of fiscal stimulus aimed at helping US consumers.
The post US and European markets dip as Covid containment efforts founder appeared first on The Guardian.