Stock markets react to threat of second wave of COVID-19


80 new infections reported in China

Stock markets reacted to the threat of a second wave of coronaviruses. Photo:

Indices of world stock markets fell on Monday, apparently over fears that a second wave of coronavirus and new quarantine restrictions would harm the Chinese economy and other countries.

According to the Financial Times, 80 new infections were reported in Beijing this weekend. These are the first recorded outbreaks in the PRC in the last 50 days.

According to Business Insider, the number of COVID-19 diseases also increased in the United States last week, which is why many states discussed the need to tighten measures to prevent the spread of coronovirus. In total, more than 2 million patients are currently registered in the United States. In addition, the fall in shares was fueled by a statement by Federal Reserve Chairman Jerome Powell that an epidemic could cause irreparable damage to the US labor market. Recall that previously the number of unemployed in the United States had increased to 6.64 million.

Amid the second wave of COVID-19, at 11:10 am London time, the stock markets responded with a downward trend:

German Dax fell 1%, British FTSE 100 – 1% and Euro Stocks 50 – 1.1%. Hong Kong Hang Seng fell 2.1%, Chinese Shanghai Composite – 1%, Japanese Nikkei – 3.5%.

US stocks also reacted with the decline. Futures on the Dow Jones index fell 1.8%, the S&P 500 – 1.6% and the Nasdaq – 1.3%.

Oil prices also fell. The West Texas Interim Index fell 1.8% to $ 35.62 a barrel, while Brent crude fell 0.8% to $ 38.42 a barrel.

The base yield on the 10-year US bond fell 0.68%. Gold fell 1% to $ 1,717 an ounce.

Along with an increase in coronavirus infections, China also posted mixed economic data on Monday. According to Rabobank analysts, real estate prices in the country increased by 0.5%, while industrial production grew by only 4.4% (instead of the expected 5%). Amid the new data, experts predict China’s GDP will be negative for the second quarter.

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Earlier, investment bank Goldman Sachs announced that the S&P 500 earnings per share would decline by 33% in 2020. Also, low-energy energy, consumer and industrial companies will put pressure on the index. According to analysts, profit margin was at a record high at the beginning of the year, falling to 8.7%, the lowest level since 2010.

The biggest hit on income will be in the second quarter, when mass unemployment, trade-offs and quarantine activity will reduce demand to an unprecedented level. During the three-month period, the S&P 500 is expected to lose $ 10 per share, a 123% decrease from the same period last year.

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