Worries over the coronavirus' resurgence weigh on global stocks

LONDON: Worries over the resurgence of the coronavirus pandemic around the world weighed heavily on global stock markets on Monday (Oct 26) with just eight days to go until the US election.

Investors are getting increasingly concerned that the spike in new cases, particularly in the US and Europe, and the associated restrictions imposed on everyday life will choke the economic recovery of the past few months.

READ: Europe prepares for more pain ahead as COVID-19 surges

“While we are seeing nations attempt to stifle the spread of the virus through more localised and tentative restrictions, it seems highly likely that we will eventually see a swathe of nationwide lockdowns if the trajectory cannot be reversed,” said Joshua Mahony, senior market analyst at IG in London.

“Traders remain torn as they weigh up the potential impending benefits of a US stimulus package and potential vaccine,” he added.

In Europe, France's CAC 40 was down 0.8 per cent at 4,869 while the FTSE 100 index of leading British shares slipped 0.3 per cent to 5,844. Germany's DAX underperformed its European counterparts, falling 2.5 per cent to 12,325, following a downbeat economic survey from the Ifo Institute showed optimism in Europe's largest economy waning after five straight months of gains.

U.S. stocks were also poised for declines at the bell with both Dow futures and the broader S&P 500 futures down 1 per cent.

In the US much of the focus on Monday will center on Congress and whether another massive economic relief package will be passed before the Nov 3 election.

US House Speaker Nancy Pelosi said Sunday she’s not giving up on passing another coronavirus relief economic package in time. She said she sent a list of concerns to the Trump administration on Friday and was told she would get answers on Monday.

Earlier in Asia, Japan’s benchmark Nikkei 225 declined 0.1 per cent to finish at 23,494.34, while South Korea’s Kospi lost 0.7 per cent to 2,343.91. Australia’s S&P/ASX 200 fell nearly 0.2 per cent to 6,155.60. The Shanghai Composite index declined 0.8 per cent to 3,251.12. Markets in Hong Kong were closed for holidays.

Oil prices were also being dragged lower on Monday amid the uncertainty surrounding the pandemic and the US election. The main New York benchmark was down 2.3 per cent at US$38.95 a barrel while the Brent international standard fell 2.1 per cent to US$40.88.

In the currency markets, the euro was down 0.3 per cent at US$1.1818 while the dollar rose 0.2 per cent to 104.92 yen.

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