European stocks slump over Covid-19 resurgence concerns
Defensive shares take brunt of slide in pan-European Stoxx 600
A currency dealer walks past an electronic signboard that shows the benchmark Korea Composite Stock Price Index (KOSPI). Photograph: Yonhap/EPA
US stocks fell and European equities slumped the most in a week as the Trump administration considered fresh tariffs and a resurgence in virus cases around the world sharpened concern about the pace of the economic recovery.
The S&P 500 snapped a two-day advance. Travel stocks and other companies that stand to benefit from life returning to normal fared worse. Oil slid below $40 a barrel in New York and gold steadied at $1,770 an ounce. The tech-heavy Nasdaq indexes were little changed as investors continued to favor companies with fortified balance sheets and better prospects in a stay-at-home economy. Zoom Technologies and Peloton Interactive advanced.
Market sentiment is turning more negative on concern that the spreading coronavirus could force policy makers to slow the pace or reverse business re-openings. At the same time, there’s the potential for trade tensions to resurface between the European Union and the US.
“The outbreaks have given markets the unpleasant reminder that the pandemic is far from over and that the economic recovery may be slower than expected,” said Mobeen Tahir, associate director of research at WisdomTree in London. But the downturn would only become serious “if infection rates rise to alarming levels and sweeping lockdowns are enforced again.”
The White House is weighing new tariffs on $3.1 billion of exports from France, Germany, Spain and the UK. The American Trade Representative wants to impose new tariffs on European exports like olives, beer, gin and trucks, while increasing duties on products including aircrafts, cheese and yogurt, according to a notice published late Tuesday evening. The EU is also debating whether to keep the door shut to American travelers this summer. – Bloomberg