Global stocks hammered on worries about latest Covid wave

accreditation
0:00
play article
Subscribers can listen to this article
Getty Images
Getty Images

Global equity markets were hammered Thursday as Japan's decision to bar fans from the Olympics focused attention on the continued threat from Covid-19 to the global recovery.

The JSE's All-Share Index fell more than 2% to its lowest level in two weeks.

After an ugly day in Europe and Asia, Wall Street stocks opened sharply lower shortly after the Japanese Olympic minister's announcement, which followed a move to put Tokyo under a virus state of emergency from July 12 to August 22.

The action came as Tunisia's health ministry spokeswoman called the effect of the virus on the country "catastrophic," while France warned nationals against traveling to Spain or Portugal on vacation because of a spike in cases.

"There's a growing concern about global growth," said Chris Low of FHN Financial, who also cited a shift towards monetary easing by top Chinese officials as illustrative of concerns about the economic outlook.

US stocks ultimately recovered somewhat from their session lows, but all three major indices ended solidly down, with the Dow shedding 0.8 percent.

David Kotok, chief investment officer at Cumberland Advisors, predicted in a note that US growth would "slow substantially" in the second half of 2021, saying the drivers of outsized activity in the first semester have already passed.

The firm is adjusting its investment approach, he said.

"In the first half of this year, we achieved the results that we anticipated we would achieve for the entire year. Actually, we exceeded them in many accounts," Kotok wrote. "So, the question becomes, do you put some in the bank?

"In our view, the answer is yes."

But David Jones, chief market strategist at European investment trading platform Capital.com, noted that US stocks bounced somewhat from their lows Thursday, a pattern that also held for oil prices, which rallied on Thursday.

Worries about the pandemic and an abrupt shift in central bank policy "don't look big enough just yet to spook markets and cause a more sustainable sell-off," Jones wrote.

"For now, markets still look to be undeterred -- although that can be a dangerous belief to hold onto indefinitely. Just ask a Bitcoin buyer from April."

In Europe, major bourses closed with losses of more than 1.5 percent as the European Central Bank revised its inflation target slightly higher, saying in a statement that there might be a "transitory period in which inflation is moderately above target."

IG analyst Josh Mahony said: "Despite the expectation that we should be filled with optimism over a second-half rebound, we are instead seeing traders focus on the bumpy road ahead and implications of rising inflation levels."

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.52
-0.1%
Rand - Pound
20.21
-0.0%
Rand - Euro
17.16
-0.0%
Rand - Aus dollar
10.73
+0.2%
Rand - Yen
0.13
-0.0%
Gold
1,801.05
-0.2%
Silver
25.13
-0.1%
Palladium
2,655.00
+0.0%
Platinum
1,004.93
-0.4%
Brent Crude
71.29
+1.3%
Top 40
62,200
0.0%
All Share
68,371
0.0%
Resource 10
69,148
0.0%
Industrial 25
86,202
0.0%
Financial 15
13,559
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Should pension fund members be allowed to access their savings before retirement?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, it's their money to do with as they please.
33% - 191 votes
No, more people will end up without enough savings in retirement.
37% - 214 votes
Depends on how big the withdrawal limits will be.
30% - 177 votes
Vote