Covid sell-off: 'The term sea of red was invented for such days'
People walk by the New York Stock Exchange as fears of a second Covid-19 wave has seen stock prices drift across the major world indices. Picture: AP Photo/Mark Lennihan, File
Fears of a second Covid-19 wave and the threat of new economic havoc caught up with global stock markets, as shares slid across the board.
Major stock indices from Frankfurt, Paris, and London, were also hit on the double as documents released by the International Consortium of Investigative Journalists said JPMorgan, Deutsche Bank, and HSBC were among global banks linked to $2 trillion (€1.7trn) in suspect transactions in the last two decades.
The Dax and Cac-40 ended 4% and 3.5% lower, while London's Ftse-100 also shed 3.5%.
"The term sea of red was invented for such days," said Chris Beauchamp, chief market analyst at online broker IG.
Economists are scrambling to understand the costs of new lockdowns designed to stem the increases in Covid-19 cases, while warning political tension in the US ahead of November's presidential election will frighten investors more.
"If this is the start of something bigger then we could have a long way to go before a bottom is in place —usually election years see US equities weaken from today into the end of October," Mr Beauchamp said.
In Ireland, market heavyweights AIB lost 5.5%, Bank of Ireland slid 2.7%, and CRH tumbled by over 6%.
Repeating a long worn pattern, travel and leisure stocks were hit hard on the rising number of Covid-19 cases.
In Dublin, Dalata Hotel Group were the worst absolute performer falling by 9%, while Ryanair shares fell 5%, and, in London, IAG, the owner of British Airways, Aer Lingus, and Iberia, slid by 12%.
Permanent TSB was the exception. Its shares rose 6.6% as investors bet it could benefit the most should the review hanging over Ulster Bank end up in the bank being wound down in the Republic.
Other relative winners were building products maker Kingspan and foods giant Kerry Group, which ended slightly lower in the session despite the widespread sell-off.
Meanwhile, Wall Street’s main indexes hit their lowest in nearly seven weeks as concerns about fresh Covid-19-driven lockdowns and the inability of the US Congress to agree on more fiscal stimulus raised fears about another hit to the domestic economy.
Another round of business restrictions will threaten a nascent recovery in the wider economy and add further pressure on equity markets, analysts said. The first round of lockdowns in March had led the S&P 500 to suffer its worst monthly decline since the global financial crisis.
“We’ve been in a momentum type trading market now for weeks,” said Rick Meckler, a partner at Cherry Lane Investments.
“When the market ran up, its biggest reason was people wanted to get in before it was even higher. And now people are becoming nervous that the almost extraordinary gains for this year will all be given back,” he said.
“You’ve now put yet another negotiating factor into that fiscal stimulus policy response, which makes it even less likely to pass before the November election,” Mr Mantione said.
Congress has for weeks remained deadlocked over the size and shape of a fifth coronavirus-response bill, on top of the approximately $3 trillion (€2.5trn) already enacted into law.
- Additional reporting Reuters
