Fresh Covid outbreak fears jolt markets

Markets across the world sank on Monday, extending last week's losses on concern that a resurgence of Covid-19 cases in China and other countries could warrant fresh lockdowns and indefinitely delay economic recovery.
As US markets skidded, benchmark indices fell in Paris, London, Tokyo and Shanghai after China reported new local infections in Beijing and re-imposed precautions to prevent it from spreading.
"Markets around the world have sold off again on heightened fears around a second wave of coronavirus infections and deaths," said investment director Russ Mould at stockbroker AJ Bell.
Tokyo tumbled to a loss of 3.5 per cent by the close, Hong Kong slid 2.2 per cent and Shanghai lost one per cent on signs that the deadly pandemic has returned in China amid a resurgence in the United States.
Once again, the pandemic has triggered cause for fear and doubt about the road ahead," Hayaki Narita at Mizuho Bank said in a commentary.
"Rising Covid-19 cases in Latin America and parts of Asia, re-emerging second wave risks in parts of the US, South Korea and China and cluster cases in Japan were adding to worries," he said.
Major stock markets in the Middle East ended lower on Monday, mirroring a slide in global shares and oil prices as growing fears of a second wave of coronavirus infections revived economic worries.
In Dubai, the index retreated 1.9 per cent, with Emaar Properties falling 3.5 per cent, while Dubai Investments slid 4.2 per cent, extending losses for a third session since Thursday after it traded ex-dividend.
The Abu Dhabi index edged down 0.2 per cent, with top lender First Abu Dhabi Bank shedding 1.4 er cent.
Saudi Arabia's benchmark index fell 0.4 per cent, with Al Rajhi Bank shedding 0.8 per cent and National Commercial Bank, the kingdom's largest lender, dropping 1.8 per cent. In Qatar, the index dropped 0.6 per cent, with petrochemical firm Industries Qatar losing 1.6 per cent and Qatar Islamic Bank closing 0.9 per cent.
Outside the Gulf, Egypt's blue-chip index fell 0.6 per cent, driven down by a 0.6 per cent fall in Commercial International Bank.
Stocks in Europe plunged more than two per cent at the open, but later trimmed their losses, as European nations press ahead with easing their strict lockdowns. Germany, Belgium, France and Greece reopened their borders to EU countries from Monday. Austria will follow today and Spain on Sunday. France on Monday allowed cafes and restaurants to serve customers inside, as well as on terraces.
In India shares fell more than 1.5 per cent on Monday, dragged lower by bank stocks, as investors were unnerved by a surge in domestic coronavirus cases, making the country world's fourth-worst affected country as fears of a second wave of infections in Beijing and parts of the US.
The NSE Nifty 50 index ended down 1.6 per cent at 9,813.70, while the benchmark S&P BSE Sensex closed 1.63 per cent lower at 33,228.8.
Oil prices also extended last week's losses on fears that a second wave could ravage demand for the commodity.
"The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we are seeing in the markets," said Craig Erlam at trading firm OANDA.
Beijing has carried out mass testing and locked down several neighbourhoods after 79 cases were linked to a single wholesale food market in the capital. City official Li Junjie on Monday said cases had also been found at another market.
The city has raced to quash the new outbreak, closing the affected markets, deploying paramilitary police and putting nearby housing estates under lockdown.
That came as more than a dozen US states, including populous Texas and Florida, reported their highest-ever daily case totals, while Rome and Tokyo have also seen fresh spikes.
"It means the virus hasn't lost its infectiousness, it isn't weakening... we shouldn't let down our guard," World Health Organisation deputy director Ranieri Guerra told Italian journalists.
AxiCorp analyst Stephen Innes warned that new US infections could be an ominous sign for markets.
Despite the latest equity losses, global stock markets have soared up to 50 per cent from their March troughs thanks to the lifting of stay-at-home orders and trillions of dollars of stimulus by governments and central banks.
The dollar inched up to 107.33 Japanese yen from 107.37 yen. The euro was flat at $1.1254.
- issacjohn@khaleejtimes.com