European stock markets failed to mount a rebound yesterday, after falling sharply the day before, fearing that a resurgence of the coronavirus could force new economically painful containment measures.
Traders have also given up almost all hope that a new US stimulus package will be passed ahead of next Tuesday’s election, with Democrats and Republicans blaming each other, though a new deal is still expected. be concluded thereafter.
The prospects of U.S. lawmakers approving another round of stimulus kept stock markets buoyant for weeks, but the U.S. Senate closed its session on Monday.
“This means investor sentiment will be dominated by the resurgence of the coronavirus until at least Election Day, as well as company earnings,” said Fawad Razaqzada, market analyst at ThinkMarkets.
On Wall Street, the Dow was down 0.3% in midday trading, a day after suffering its worst session since early September, down more than 2%.
The Nasdaq Composite was in positive territory thanks to gains in the tech sector, driven by a successful $ 35 billion acquisition by Advanced Micro Devices, a leading computer chip maker.
European stocks added to heavy losses on Monday as more countries move towards imposing tighter restrictions and even lockdowns in order to slow the spread of the coronavirus, but which would cause even more economic pain.
London ended the day down 1.1%, while Frankfurt lost 0.9% and Paris lost 1.8%. The main Asian indices closed in a mixed manner.
Oil prices rebounded from sharp declines on Monday, as the dollar fell against its main rivals.
Further lockdowns could lead to widespread job losses as many companies can no longer hold out, analysts fear.
“The spread of the second and third waves of Covid-19 may be triggering a point of no return for some industries as the economic damage is almost irreversible,” Axi strategist Stephen said Innes.
Keeping an eye on next week’s vote, he added, “We should expect price action to remain volatile in the days to come as investors are very reluctant to take significant risk ahead of what. promises to be a week or two of headlines. ”
As the pandemic fuels demand for computers and video game consoles as people depend on the internet to work, learn and play more at home, Advanced Micro Devices has announced an agreement to purchase Xilinx, its maker rival. computer chips, for $ 35 billion.
AMD shares fell 3.6%, although the company also said third quarter profit more than tripled from a year ago to $ 390 million as revenue increased by 56% to $ 2.8 billion, exceeding expectations.
A number of leading US companies have published earnings reports that are exceeding expectations, including Caterpillar, 3M, Pfizer and Merck.
But analysts at the Charles Schwab brokerage have said that at this point for investors, “actual earnings numbers may be less important than company executives say they expect” going forward.
Due to the degree of uncertainty, however, many companies do not provide full year earnings guidance.
Uncertainty over a Brexit trade deal and concerns over the financial fallout from coronavirus-related restrictions put pressure on UK markets this month, with data also pointing to a failing economic recovery.
The latest industry survey showed Britain’s retail sales this month fell to the lowest level since June, after hitting an 18-month high in September.
In the latest round of restrictions, Warrington in north-west England was placed on the highest level 3 alert level, while Nottingham in central England and three neighboring towns would have similar restrictions from tomorrow.
“In recent months, the stock rally has been fueled by easy monetary policy, fiscal stimulus and positive developments in the fight against the Covid-19 pandemic,” said Milan Cutkovic, market analyst at Axi.
“Removing any of these pillars could leave the markets on shaky ground.”
The Bank of England is expected to increase the size of its asset purchase program by an additional £ 100 billion on November 5 to support a struggling economy, according to a Reuters poll of economists.
At the same time, the European Commission said that the European Union and Britain are actively engaged in reaching a Brexit deal on their future relationship.
In a favorable situation, HSBC Holdings Plc, specializing in Asia, jumped 3.4% after reporting a revamp of its business model induced by a pandemic.
Bloomsbury Publishing Plc gained 18.1% after publisher Harry Potter posted higher profit in the first half and resumed dividend payments.
In London, the FTSE 100 closed down 1.1% at 5,728.99 points; Frankfurt – DAX 30 finished down 0.9% at 12,063.57 points; Paris – The CAC 40 closed down 1.8% at 4,730.66 points and the EURO STOXX 50 ended down 0.9% at 3,077.31 points yesterday.