Stocks slide on concern about pace of economic recovery

TOKYO (AP) — Global stock markets tumbled yesterday after the Federal Reserve of the United States (US) signalled a long path to recovery from the devastation of the coronavirus pandemic and amid reports of rising numbers of coronavirus infections in many countries.

In the United States (US), Texas and Florida were among the states reporting jumps in the number of coronavirus cases after precautions were relaxed last month. The total number of US cases surpassed two million.

Globally, India reported a record number of nearly 10,000 new coronavirus cases over the past 24 hours with health services in the worst-hit cities of Mumbai, New Delhi and Chennai becoming swamped by the rising infections.

In South Korea, the latest 45 new cases came in a weekslong resurgence that health authorities said they fear might develop into a massive wave.

Such developments have raised alarm, said Stephen Innes of AxiCorp.

A currency trader talks on the phone near screens showing the Korea Composite Stock Price Index and the foreign exchange rate between USD and KRW at the foreign exchange dealing room in Seoul, South Korea. PHOTO: AP

“After all, a secondary outbreak is nothing to sneeze at as traders remain in a state of risk limbo watching risk assets for signs of continuation or stall,” Innes said in a commentary.

Wall Street was expected to add to losses from the previous day, with Dow futures down 2.4 per cent and S&P 500 futures down 2.1 per cent. New weekly figures for US jobless claims are expected to once show another rise of over a million people.

In Europe, France’s CAC 40 was 2.6 per cent lower at 4,923 and Germany’s DAX dropped 2.6 per cent to 12,203. Britain’s FTSE 100 fell 2.4 per cent to 6,179.

Japan’s benchmark Nikkei 225 sank 2.8 per cent to close at 22,472.91, while Australia’s S&P/ASX 200 skidded 3.1 per cent to 5,960.60.

South Korea’s Kospi dropped 0.9 per cent to 2,176.78 and Hong Kong’s Hang Seng slipped 2.3 per cent to 24,480.15. The Shanghai Composite shed 0.8 per cent to 2,920.90.

The outlook for a recovery from the worst downturn in decades is uncertain as states and countries push ahead with re-openings from pandemic shutdowns.

Brazil, Mexico, South Africa, India and Pakistan are among countries easing tight restrictions before their first outbreaks have peaked and before establishing detailed surveillance and testing systems to keep the virus under control.

Health experts warned that could ultimately have devastating consequences.

The Federal Reserve emphasised on Wednesday that the central bank will keep providing support to the economy by buying bonds to maintain low borrowing rates.

It forecast no rate hike through 2022, which could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.

In other trading, benchmark US crude oil dropped USD1.68 to USD37.92 a barrel. Brent crude, the international standard, fell USD1.45 to USD40.28 a barrel.

The dollar was trading at JPY107.10, down slightly from JPY107.12 late Wednesday. The euro inched down to USD1.1359 from USD1.1377.