A return to lockdown and a lack of demand for travel have brought stock markets lower. Tradefair brings you the latest financial market news...
"Investors’ hopes that the Covid pandemic would not force further stringent mitigations measures and/or potential wholesale lockdowns that would push global economies back into ‘low-consumption mode’ appear to be coming under challenge,"
- Yousef Abbasi, global market strategist at StoneX
US stocks underwent a sharp fall on Wednesday (October 28), as the latest figures showed an increase in coronavirus infections globally. Cases in the US have hit a record daily average of 71,832 in the past week, according to data compiled by John Hopkins University.
Lockdowns without stimulus
The Covid Tracking Project reports hospitalisations relating to coronavirus have increased by 5% or more in 36 states, with new measures being brought in. Chicago, for example, has been forced to close all indoor restaurant facilities by order of the state of Illinois.
Jim Cramer of CNBC said: "I think there's going to be a call for lockdowns the likes of which we've seen in Chicago. The lockdowns without the stimulus equals what we're seeing. It's a shame because, had there been stimulus, we'd then be focusing on earnings and the earnings are actually pretty darn good."
Wednesday's declines were spearheaded by the stocks that would be most impacted by lockdowns. United Airlines lost 4.6%, Royal Caribbean shares fell 7.4%, Norwegian Cruise Line dropped 9.1% and Carnival saw 10.6% fall from its value.
Yousef Abbasi, global market strategist at StoneX, said: "Investors' hopes that the Covid pandemic would not force further stringent mitigations measures and/or potential wholesale lockdowns that would push global economies back into 'low-consumption mode' appear to be coming under challenge.
"Avoiding these stringent measures has been a major tenet of the bullish thesis, particularly for those looking to value stocks and for a steeper yield-curve."
Is the biggest drop since March coming?
The 30-stock Dow is looking set to experience its largest weekly drop since March, when the pandemic was at its peak, having fallen 6.4% already this week. It's a similar story for the S&P 500, which is down 5.6% and headed for the largest reduction in value it has experienced since March. Heavily influenced by tech, the Nasdaq has fallen by 4.7% so far this week.
Corporate earnings from the previous quarter have also come under scrutiny by Wall Street. Among these are those from tech giant Microsoft, which reported better-than-expected earnings and revenue. This was due to the fact that its cloud business sales increased as more people worked from different locations. Despite this, light revenue guidance meant the stock fell 5%.
Conversely, aerospace company Boeing reported a narrower-than-expected-loss, but has announced job cuts for 2021. Thousands more roles will be axed over the coming year, as the industry adapts to reduced demand in air travel for the long-term. Shares at Boeing dropped 4.6%.
General Electric reported stronger-than-forecast revenues, as well as an unexpected adjusted profit for Q3 and therefore gained 4.5%. Meanwhile, First Solar beat analyst predictions for its quarterly earnings, with shares up 13%.
A global pandemic
Covid is impacting stocks all over the world, with Europe particularly feeling its effect at present. France has announced a new national lockdown and both Germany and the UK are implementing stricter measures. A 4.2% fall in the German Dax has sent it to its lowest level since May, while the French CAC 40 fell by 3.4% and London's FTSE 100 closed down 2.6%.
German chancellor Angela Merkel said the country was facing a make-or-break moment, as infections rise at an alarming rate. She added that what happens next would determine "whether we can keep the pandemic under control ... or whether that control will slip away from us".
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