European stocks slide to 5-month low on mounting Covid worries

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European stocks dropped for the third day in a row, knocking the regional benchmark to its lowest degree since May, on mounting expectations of recent authorities measures to gradual the unfold of coronavirus.

The Stoxx 600 index fell 2.3 per cent after the open on Wednesday and has shed 4.9 per cent because the finish of final week as bourses in Frankfurt, Paris and London have endured bouts of promoting.

Angela Merkel, the German chancellor, and French president Emmanuel Macron are each anticipated to announce on Wednesday new restrictions to curb the second wave of the pandemic that’s worsening throughout the continent.

“Across western Europe, confirmed case growth has accelerated rapidly and continues to deteriorate. Positive testing rates and hospitalisation rates have surged across countries as well,” Goldman Sachs mentioned in a observe to shoppers on Tuesday night.

The spectre of recent restrictions, which weighed closely on financial output throughout the preliminary wave of the pandemic this spring and summer time, has “severely soured” market sentiment, in accordance to strategists at Italian financial institution UniCredit.

France’s CAC 40 fell 2.1 per cent in early commerce on Wednesday, with the German Dax off 1.9 per cent and the FTSE 100 in London down 1.2 per cent.

US stock-index futures additionally got here below promoting stress throughout the European morning, suggesting the gloomy sentiment might additionally spill over to Wall Street later on Wednesday. Futures monitoring the S&P 500 index have been down about 1 per cent in latest dealings.

American and German authorities debt additionally elevated modestly in value, suggesting rising demand for the haven property. The 10-year Treasury yield was down 0.02 proportion factors at 0.76 per cent, whereas its German equal fell 0.025 proportion factors to minus 0.63 per cent. The greenback ticked up 0.2 per cent towards a basket of six main currencies.

Traders additionally mentioned the upcoming US election was anticipated to be a supply of tumult in equities markets over the following few weeks. The Vix index, a measure of anticipated volatility over the following month, traded at 35 on Wednesday morning — effectively above its long-term common of 20.

“The investment environment has entered a period of greater volatility due to uncertainty regarding the US presidential election on November 3, the timing of an additional US stimulus package, as well as concerns about how rising Covid-19 cases in western countries will impact the economic recovery,” in accordance to the Credit Suisse funding technique unit.

– www.ft.com

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