Stock markets tumble on fears of Covid-19 relapse

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The reality that the coronavirus crisis is far from over is threatening a blistering equity market rally that had taken some world indexes to fresh highs.

Global stocks tumbled and bonds rallied on fears a rise in new coronavirus cases could hurt a rush to open economies.

Lockdown measures to curb the virus’ spread had triggered a prolonged economic slowdown, a threat investors broadly looked past in recent weeks as they focused on improving data and support from the US Federal Reserve.

World stocks had risen to just 7% off prior peaks but were down 2.6%, the sharpest one-day drop in two months.

The Ftse-100 fell nearly 4%, while Germany's Dax was down 4.5% and Paris tumbled by nearly 5%.

The novel coronavirus has ravaged the global economy. The OECD this week forecast the global economy to contract 7.6% if there is a second wave of infections.

Bolstering the case for optimism in the US had been positive economic news. A closely watched monthly jobs report last Friday showed an unexpected fall in the unemployment rate.

“I guess people were assuming and acting like Covid-19 is something of the past, but it is actually still quite present,” said Stephane Ekolo, an equity strategist at TFS Derivatives in London.

-Reuters