Markets are taking fright as the health crisis shows no sign of ending with new restrictions threatening to curtail economic activity. ©AFP/File Daniel ROLAND
London (AFP) – Global stock markets plunged Thursday with investor sentiment hammered by fears that tighter coronavirus restrictions could derail a tentative economic recovery.In London, equities closed 1.7 percent lower after the UK government announced the British capital faces more stringent coronavirus restrictions as case numbers rise.

Paris suffered a drop of more than 2.0 percent after the French government announced a curfew for the capital and eight other cities — covering almost a third of the country’s population — for as long as six weeks.

And Frankfurt stocks lost 2.5 percent after Germany also ramped up Covid-19 restrictions, while the EU’s disease control agency labelled more than half of the bloc’s member states as red zones in a new map to guide member states’ decisions on travel restrictions.

Across the Atlantic, Wall Street sentiment was not helped by Labor Department data showing new applications for US jobless benefits rose to a seven-week high of 898,000 last.

The increase of 53,000 from the prior week was the sharpest rise in seasonally-adjusted initial claims in two months as the United States attempts to recover from mass layoffs caused by virus-related business shutdowns earlier this year.

The Dow and the tech heavy Nasdaq had fallen around 1.0 percent two hours into trading with Apple and Tesla notably losing ground.

Asian markets had earlier also closed well deep in the red.

“Renewed health concerns and tighter restrictions around Europe are hammering stocks,” said CMC Markets analyst David Madden.

“Dealers are dumping stocks for fear that economic activity will drop off because of the tighter restrictions in various parts of Europe.”

“The latest restrictions are likely to hamper Europe’s economic recovery — which was already running out of steam before the health woes ramped up again,” said Madden.

The pound struggled as EU leaders met to discuss post-Brexit trade talks, with Prime Minister Boris Johnson urging them to give ground or see Britain walk away with no deal.

Oil prices also faltered, losing more than three percent.

– ‘Far apart’ on stimulus –

Equities have been getting support in recent weeks as investors believe Republicans and Democrats will eventually reach a deal on another package of measures to support the US economy.

Those hopes were dented Wednesday after US Treasury Secretary Steven Mnuchin warned that Republicans and Democrats were still “far apart” on a stimulus package before next month’s presidential and congressional elections.

However, analysts said traders are taking comfort from the possibility that Joe Biden and the Democrats will win the presidency and both houses of Congress, paving the way for a bigger stimulus than anything that could be agreed before the vote.

– Key figures around 1550 GMT –

  • New York – Dow Jones: DOWN 0.5 percent at 28,361.74
  • London – FTSE 100: DOWN 1.7 percent at 5,832.52 points (close)
  • Frankfurt – DAX 30: DOWN 2.5 percent at 12,703.75 (close)
  • Paris – CAC 40: DOWN 2.1 percent at 4,837.35 (close)
  • EURO STOXX 50: DOWN 2.6 percent at 3,188.34
  • Tokyo – Nikkei 225: DOWN 0.5 percent at 23,507.23 (close)
  • Hong Kong – Hang Seng: DOWN 2.1 percent at 24,158.54 (close)
  • Shanghai – Composite: DOWN 0.3 percent at 3,332.18 (close)
  • Euro/dollar: DOWN at $1.1705 from $1.1746 at 2100 GMT
  • Pound/dollar: DOWN at $1.2928 from $1.3012
  • Dollar/yen: UP at 105.27 yen from 105.17 yen
  • Euro/pound: UP at 90.54 pence from 90.27 pence
  • West Texas Intermediate: DOWN 1.9 percent at $40.25 per barrel
  • Brent North Sea crude: DOWN 1.8 percent at $42.54

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.