Global stocks fall on Covid surges

27 Oct 2020

U.S. stocks markets recorded their biggest one-day drop in a month on Monday amid concerns that surging coronavirus infections will hit business activity and as another day passed without a deal for pre-election fiscal stimulus.

The benchmark S&P 500 index tumbled as much as 2.9% in afternoon trading – the largest drop since 23 September.

“The sell-off was broad, with economically sensitive sectors such as energy, financials and industrial groups under pressure. Travel and leisure companies sustained heavy selling,” according to analysis by the FT.

“Nothing is to be gained by pretending that the pandemic and the economic pain it has caused are coming to a swift end,” noted David Kelly, chief global strategist at JPMorgan.

“Rather, investors, policymakers and the general public would all be well served by accepting the reality of both what it will take and how long it will take to recover from the pandemic recession.”

For their part, IG Group analysts said: “With the U.S., Spain, and France all seeing record numbers of Covid cases, it is clear that the second wave could be worse than the first unless drastic action is taken.”

The sell-off on Wall Street was replicated on Tuesday in Europe. The region-wide Stoxx 600, which dipped 1.8% on Monday, also lost another 0.7% in early trading.

The U.S. has hit a third peak in Covid-19 infections, recording about 83,700 new cases each day, far surpassing the previous record in July. The fatality rate has been flat, but scientists warn that it tends to lag cases by two weeks.