Global stocks fell on Friday amid growing concerns over whether a second wave of coronavirus will derail the economic recovery.
Wall Street opened lower on Friday, the benchmark S&P 500 and the state-of-the-art Nasdaq Composite, each down about 0.1%. The drop brings the blue-chip S&P 500 1% off this year’s gains wiping.
The Stoxx Europe 600 index fell around 0.6% in the afternoon session, leaving the regional benchmark down more than 3% in September. Stocks on the continent are now heading for the worst month since the March liquidation, with the Frankfurt, Paris and Milan stock exchanges all falling more than 1% on Friday.
The FTSE 100 was more resilient, falling 0.1 percent, helped by a weakening in the pound which supports exporters on the London index.
Economically sensitive sectors, including auto and parts manufacturers, travel and leisure companies and banks, were among the biggest declines in Europe. Industries sought after for their relatively stable incomes, such as utilities, dodged the sale.
The US dollar, often viewed as a safe haven asset, rebounded 0.3 percent to nearly a month higher against a basket of its trading peers.
Nerves and a large sell-off in stocks this week were sparked by rising infections, renewed lockdowns, a more cautious tone from policymakers and disappointing eurozone data that points to a slowing recovery economic.
“People came to feel comfortable taking a little more risk in portfolios,” said Jason Borbora-Sheen, portfolio manager at Ninety One. “It will be a painful episode.”
Fahad Kamal, chief investment officer at Kleinwort Hambros, Société Générale’s private banking and wealth management division, said September was “a microcosm of the year.”
The month started with the rise in stock prices, with investors optimistic about the booming economic recovery followed by a large sell-off as traders increasingly concerned about overvalued stocks and the decline of the recovery. .
“I don’t think this is a fundamental readjustment to a slowdown or another bearish market,” but rather marks a healthy correction, Mr. Kamal added.
On Thursday, the UK government announced plans to replace the leave program with a German-style wage subsidy scheme, in which the Treasury would subsidize people who worked at least a third of their usual hours. Employees unable to work, however, would not be eligible. “I cannot save all the businesses. I cannot save all the jobs, ”Chancellor Rishi Sunak said.
Sven Jari Stehn, chief European economist at Goldman Sachs, said he was skeptical that the program would be enough to encourage employers to keep a large proportion of employees on leave. He expects 2.2 million workers to leave the leave program only to find themselves unemployed.
The price of European government bonds edged up as investors turned away from equities. The 10-year Bund yield recently fell 0.014 percentage point to minus 0.52%, while its French counterpart declined by a similar margin to minus 0.25%.
Encouraged by the prospect of further stimulus in the United States, equities in the Asia-Pacific region closed broadly higher on Friday. Tokyo’s Topix rose 0.5% and China’s CSI 300 rose 0.2%. But Hong Kong’s Hang Seng slipped 0.3%, weighed down by the healthcare and cyclical sectors.