World stocks stumble as virus cases spike

Investors worried new cases can slow or reverse loosening of lockdown measures


Reuters May 12, 2020
PHOTO: REUTERS

LONDON: Stock markets fell on Monday after reports of a pickup in new coronavirus cases rattled investors, who were worried that it could slow or reverse the loosening of lockdown measures.

Shares had initially gained, led by Asia, where markets cheered further loosening of coronavirus restrictions in the region - New Zealand will ease some curbs from Thursday, and Japan plans to end a state of emergency for areas where infections have stabilised.

In Europe, millions in France are set to emerge cautiously from one of the region’s strictest lockdowns, while Britain on Sunday laid out its own gradual path out of lockdown. But South Korea warned of a second wave of the virus as infections rebounded to a one-month high, while new infections accelerated in Germany, which has been easing its lockdown.

Investors have tried to stay optimistic in recent weeks, opening up a gap between dire economic conditions on the ground and a stock market rebounding because of huge stimulus programmes as well as on the timing and speed of any recovery.

A spike in new cases in countries that have already begun to relax restrictions on commerce would jolt market confidence badly if it led governments to reintroduce some lockdown measures.

“If we do have a second wave and lockdowns, that’s almost the worst outcome from an economic perspective,” said Guy Miller, chief market strategist at Zurich Insurance Company.

Miller said that would “postpone business investment indefinitely” and see consumers retrench as hopes for a quick economic recovery were dashed. The Euro Stoxx 600 was down 0.87%. Germany’s Dax was 0.78% lower and Britain’s FTSE 100 0.36% in the red.

Published in The Express Tribune, May 12th, 2020.

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