Second wave Covid restrictions haunt markets across Europe                    

Airline shares ended much lower, with Ryanair shedding 4% and IAG, owner of Aer Lingus, British Airways, and Iberia, down 2.5%

Market sentiment continues to sour as a London lockdown poured fuel to the fire for coronavirus concerns

Stock markets across Europe slid as governments across the continent announced new restrictions amid a resurgence of Covid-19. 

In London, the Ftse 100 ended 1.7% lower on investor concerns about both the Covid-19 economic fallout and fears about the progress of Brexit talks, while Frankfurt's Dax and the Cac 40 in Paris closed about 2.5% lower.     

Across Europe, airline shares ended much lower, with Ryanair shedding 4% and IAG, the owner of Aer Lingus, British Airways, and Iberia, ending 2.5% lower, amid restrictions in cities, including Paris and London.

"Market sentiment continues to sour as a London lockdown poured fuel to the fire for coronavirus concerns," said Joshua Mahony, senior market analyst at online broker IG.

"The decision to push London onto a phase two stage does little to help boost confidence in the outlook of the UK economic hub, with the tier two restrictions bringing plenty of downside without the benefit of economic support associated with a tier three lockdown," Mr Mahony said. 

In Ireland, shares in ICG, owner of Irish Ferries, were also hit by the sell-off of transport and hospitality companies, falling by over 1%. Dalata Hotel ended down 1%.

“It is a bit worrisome, and I think that’s why you’re seeing some of the weakness today — because of the containment measures that were announced in those countries,” said Ken Berman, chief strategist with Gorilla Trades. 

If we do have another surge in cases, and there have to be curbs put into place here and containment in the US, obviously it’s going to hurt the economy 

Wall Street stocks fell as an unexpected rise in weekly jobless claims exacerbated fears of a stalling economic recovery, a day after Treasury secretary Steven Mnuchin dashed hopes for more fiscal aid before the election.

Initial claims for state unemployment benefits totalled a seasonally adjusted 898,000, up from 845,000 in the prior week. 

A separate report showed manufacturing activity in New York State fell more than expected in October.

Hopes of another round of fiscal aid to support the US domestic economy helped fuel Wall Street’s recent rally, bringing the S&P 500 and Nasdaq earlier this week to within 2% of their record closing highs in early September. 

“It’s been a kind of rollercoaster as the market seems to be taking cues mostly from the stalled stimulus plan and concerns about fourth-quarter earnings if we don’t get additional stimulus after the vote,” said Art Hogan, chief market strategist at National Securities in New York.

With less than 20 days to the election, US president Donald Trump and Democratic challenger Joe Biden continue on the campaign trail.   

Focus is also on the quarterly earnings scorecard for corporate America, with expectations for third-quarter earnings improving, according to Refinitiv Ibes data.

Walgreens Boots Alliance gained as the retailer forecast profit to grow in single digits in 2021 after posting a better-than-expected fourth-quarter profit. 

• Additional reporting Reuters and Bloomberg