European stock markets fell on Thursday as investors grew worried about rising viral infections, new lockdowns, slowing economic recovery, stalling US stimulus talks and US electoral uncertainty.
Global stocks have posted impressive gains in recent months, but the so-called ‘bull run’ has come to a halt in recent weeks as expectations fade as a wave of fresh liquidity from governments and banks power plants will suffice – start the economy.
“The markets are digesting and fighting against this idea that investors’ growth expectations may not materialize,” said Lauren Goodwin of New York Life Investments.
“As the fiscal momentum in the United States begins to weaken, some of those expectations of a slow and steady recovery are shaken.”
The latest example was an increase in US job applications for the week of September 19, despite the forecast for the decline, although in the afternoon of trading in New York, the Dow Jones index rebounded after early losses to post a solid 1.1% gain.
In Europe, the FTSE 100 index in London closed down 1.3%.
Markets continued “to face a host of uncertainties,” the Schwab Market Update noted.
As the northern hemisphere now heads into fall and winter, there are also fears that a second wave of coronavirus could force the reimposition of tough and economically devastating containment measures.
France is closing bars and restaurants in its second city of Marseille and putting it on “high alert”, while several other cities, including Paris, will also see new restrictions.
The UK government has also shortened bar opening hours and warned of other measures, while Spain’s Madrid region has locked down around 850,000 people and plans to expand its borders.
U.S. traders are increasingly concerned that rising infections at home could lead to similar moves, and several Federal Reserve officials, including Chief Jerome Powell, have called for a new stimulus package to mitigate impact.
But politicians on Capitol Hill appear deadlocked ahead of the November presidential election.
Michael Hewson of CMC Markets said, “The main problem with the Fed is that American politicians seem more interested in running an election campaign than helping push through a new stimulus package that would help the American people.”
– Key figures around 1600 GMT –
London – FTSE 100: -1.3% at 5,822.78 points (closing)
Frankfurt – DAX 30: Down 0.3% to 12,606.57 (close)
Paris – CAC 40: -0.8% to 4,762.62 (closing)
EURO STOXX 50: Down 0.6% to 3,159.64
New York – Dow Jones: + 1.1% to 27,061.42
Tokyo – Nikkei 225: Down 1.1% to 23,087.82 (close)
Hong Kong – Hang Seng: down 1.8 percent to 23,311.07 (close)
Shanghai – Composite: DOWN 1.7% to 3223.18 (close)
Euro / dollar: DOWN to $ 1.1659 from $ 1.1660 at 2115 GMT
Pound / dollar: + $ 1.2736 from $ 1.2722
Euro / pound: DOWN to 91.53 pence from 91.62 pence
Dollar / yen: UP to 105.42 yen against 105.39 yen
West Texas Intermediate: Down 0.2% to $ 39.85 per barrel
North Sea Brent: Down 0.5% to $ 41.56 per Barrel
dan-bcp / wai / spm