Stock Markets Extend Declining Trend on Second Coronavirus Wave
The stock markets across the world suffered losses on Monday amid threat of the second wave of virus spread. US stock futures tumbled more than 3%, extending the last week’s worst selloff since early March.
Investors’ concerns over slower economic growth increased sharply over the last week due to rising infections in China and the United States. Oil prices and the rest of commodities are falling sharply today, with WTI crude oil lost almost 5% today.
Dow futures dropped almost 3.2%, while the S&P 500 futures dipped 3% and Nasdaq futures were off 2.3%.
Japan’s Nikkei lost 3.5% of value in Monday trading. The stock market indices of South Korea, Hong Kong, and China also reported a significant drop. The situation is not much different in London and European markets. However, the market analysts believe that the threat of lockdown is very low because the world is much better equipped to deal with the spread.
The latest coronavirus reports across the world have negatively impacted investor’s sentiments even though the latest economic data has pointed a strong recovery in May.
“Overall economic output returned above 2019 levels in May for the first time since the COVID-19 outbreak,” Martin Rasmussen, China economist for Capital Economics said.
“We had previously thought that China’s economy wouldn’t return to positive year-on-year growth until [the third quarter]. But today’s data suggest that this milestone may be reached this quarter,” Martin Rasmussen added.
Unemployment has declined last week in the United States while airline companies started seeing increasing demand. Retail sales along with prospects of increasing production levels are among the bullish factors. In addition, the US Fed said that they are not planning to change the interest rate and the chairman hinted that the government will introduce more stimulus measures to stabilize the economy.