WATCH: European stock indices drop sharply
Global stock markets suffered strong sell-offs on Wednesday, as concerns about the worsening second wave of COVID-19 and the upcoming U.S. election continued.
COVID-19 cases and deaths continue to rise across Europe and the United States. New restrictions are now expected to intensify in France and Germany, the two largest economies in continental Europe. Analysts said the UK may follow suit.
Stock markets in Europe and the United States suffered heavy losses, falling to levels not seen since the depth of the first COVID-19 wave.
“We saw a relentless sell-back from Monday’s session, but this time it’s arguably even more dramatic,” said Chris Beauchamp, chief market analyst at IG.
The “avalanche” of the sale, as Beauchamp called it, was sparked by renewed fears about strict lockdowns of European economies.
French President Emmanuel Macron is expected to hold a televised speech Wednesday evening, local media reported, and France24 said Macron was likely to announce new restrictions which could include full lockdowns on weekends or full lockdowns in areas most affected.
In Germany, Angela Merkel is due to meet with regional leaders to discuss tighter restrictions. Reports suggest she is in favor of a “light lockdown,” but one that would still require the widespread shutdown of non-essential businesses.
READ MORE: Germany braces for ‘lockdown light’ as coronavirus cases continue to rise
“France and Germany appear to be on their way to some form of ‘lockdown lite’ over the next 24 to 48 hours with more likely information today and tomorrow,” Jim Reid wrote Wednesday, senior strategist at Deutsche Bank. Morning.
The strong sales started at the start of trading in Europe and gained momentum throughout the day.
The DAX (^ GDAXI) closed down 4.1% in Frankfurt and the CAC 40 (^ FCHI) lost 3.3% in Paris. In Milan, the FTSE MIB index (FTSEMIB.MI) fell by 4%. IBEX 35 (^ IBEX) lost 2.9% in Madrid. All the indices were at levels not seen since May.
IG’s Beauchamp said the UK could move towards a second lockdown “given the current direction of travel across the continent”.
The FTSE 100 (^ FTSE) closed down 2.8% in London, hitting its lowest point since April.
Retailer, restaurant and travel stocks fell across the board.
“Companies that came close to getting by in the spring may not survive another period without any business activity despite the generous state support that has been announced,” said Russ Mold, director of investments at the agent’s agent. changes AJ Bell.
Digital companies like the Ocado online supermarket (OCDO.L), the Hello Fresh meal kit delivery service (HFG.DE) and the Delivery Hero take-out app (DHER.DE) were among the few winners.
Wall Street joined in the global sale when trading began in New York City. The S&P 500 (^ GSPC) and the Dow Jones (^ DJI) were both down 3% at the time of Europe’s shutdown and the Nasdaq (^ IXIC) was 3.2% lower.
COVID-19 cases continue to rise rapidly in the United States. More than 74,000 new cases were recorded on Tuesday, according to the New York Times, bringing the total number of confirmed cases across the United States to more than 8.8 million.
“The trend in the national positivity rate started to increase in the first week of this month, and it shows no sign of stopping,” said Ian Shepherdson, chief US economist at Pantheon Macroeconomics.
Shepherdson said a record number of hospitalizations were likely before Thanksgiving.
Away from the pandemic, investors remain cautious ahead of next week’s US elections.
“Nobody wants to take too much risk before this event,” said Naeem Aslam, chief market analyst at Avatrade. “Traders have learned from their mistakes and don’t want to trust surveys because they tend to be wrong.”
The stock had been mixed during the Asian trading session overnight Wednesday. Japan’s Nikkei (^ N255) and Hong Kong’s Hang Seng (^ HSI) both lost 0.3%, but mainland Chinese markets rose. The Shanghai Composite (000001.SS) closed half a percent higher and the Shenzen Component (399001.SZ) was up 0.9%.
China has largely avoided the second wave of COVID-19 that devastated the United States and Europe, with recent data indicating a continued strong recovery in the world’s largest economy.
Watch: What is a V-shaped economic recovery?