Stock markets in Europe came under pressure yesterday as fears resurfaced over a spike in coronavirus infections, but a resilient Wall Street helped them off their worst levels, dealers said.
Across Europe, London’s FTSE 100 was up 0.1% to close at 6,179.75; Frankfurt’s DAX 30 was down 0.8% at 12,697.36, while Paris’ CAC 40 fell 1.0% at 5,007.46.
On Wall Street the Dow Jones index reversed a weaker opening trend to post solid gains by the late New York morning as investors felt the market had been oversold in the previous day’s late stumble, and upbeat results from JP Morgan lifted sentiment.
But uncertainty about the impact of renewed lockdowns on the business outlook weighed after the reimposition of some containment measures in parts of the US, Australia and Hong Kong.
“The shutdown fuels fears that the growing number of coronavirus cases will hamper the fragile economic recovery,” said City Index analyst Fiona Cincotta.
California, the richest of the US states, ordered all indoor restaurants, bars and movie theatres to re-close, while churches, gyms, shopping malls, hair salons and non-essential offices have been told to shut up shop in several densely populated counties, including Los Angeles.
The measures follow new restrictions imposed in Texas, Arizona, Florida and other major states.
The British pound slid on data showing that the virus-plagued UK economy shrank by almost a fifth in the three months to April.
A weaker British currency tends to boost share prices of companies listed in London who earn much of their income in dollars.
News that Singapore’s economy, considered a regional barometer in Asia, contracted a mind-boggling 41%-plus in the second quarter also provided a stark reality-check for traders.
Singapore’s economy shrank more than 40% in the second quarter as the coronavirus plunged the Southeast Asian financial hub into recession for the first time in more than a decade, official data showed yesterday.
The 41.2% quarter-on-quarter drop was the worst ever recorded in the city-state, which is considered a barometer for the health of global trade.
On-year, the economy contracted 12.6% in April-June, according to preliminary data released by the trade ministry.
It marked the second consecutive quarter of contraction, meaning the city state has entered a recession for the first time since 2009, when it was battered by the global financial crisis.
Trade-dependent Singapore is one of the first countries to report growth data for the period when many nations entered lockdowns, and offers an ominous warning of the devastation being wrought on the global economy.
The worse-than-expected figures will also ring alarm bells for other Asian economies reliant on trade — typically, Singapore is hit first before ripples spread across the region.
“It’s the worst-ever quarterly figure in Singapore’s 55-year history,” CIMB Private Banking regional economist Song Seng Wun told AFP.
“But it’s not a surprise as the bottom line is that Singapore is a small city state, extremely dependent on trade in goods and services.”
The trade ministry said the huge contraction was because of restrictions imposed from early April to early June to stem the spread of the virus, which included the closure of many businesses.
It also attributed the shrinkage to weak external demand as other countries imposed strict lockdown measures.
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