FTSE 100 suffers worst plunge since June amid Covid-19 lockdown fears – business

Financial stocks are leading the selloff in New York, reflecting worries that the economic recovery could falter this autumn.

Credit card operator American Express has dropped by 4.3%, with JP Morgan (-3%) and Goldman Sachs (-2.7%) close behind.

Construction machinery maker Caterpillar (-2.6%), chemicals maker Dow (-2.6%) and industrial conglomerate 3M (-2.5%) are also among the fallers.

On the Nasdaq, Google’s parent company Alphabet has fallen by 1.4%, with Microsoft losing 1%. Apple’s a little higher, though.

Neil MacKinnon, global macro strategist at VTB Capital, explains why the prospect of new lockdown measures are hitting stocks today:

“Many economic commentators think that another lockdown would be disastrous for the major economies and undermine the nascent economic recovery which has been in place in the last few months.

A new lockdown would significantly increase both the unemployment rate and bankruptcy rates, especially for small businesses.”

The US stock market has joined the selloff, with markets falling sharply at the start of trading:

• Dow Jones industrial average: down 637 points or 2.3% at 27,019 points
• S&P 500: down 67 points or 2% at 3,252
• Nasdaq: down 208 points or 1.9% at 10,584.42

That pushes the tech-heavy Nasdaq into correction territory again – down more than 10% from its recent record high at the start of September.

That reflects anxiety over rising Covid-19 cases, as well as disappointment that Congress hasn’t agreed a new stimulus package yet.

The clash over who will replace the late Ruth Bader Ginsburg on the supreme court, and when that process should take place, is further escalating tensions in Washington.

Some investors are also concerned that November’s presidential election won’t deliver a clear result, leading to deadlock over the White House.

If you’re just tuning in, here’s our news story on today’s slump on the FTSE 100, which is currently down 3% or 182 points.

Shares in London have come under severe pressure amid fears that a second wave of Covid-19 cases will force the government into harsh lockdown measures that will damage the economy.

With the health secretary, Matt Hancock, warning that the UK was at a coronavirus “tipping point” and that people tended to contract Covid-19 in social settings, shares in travel and hospitality companies were among the hardest hit by the sell-off.

The British Airways owner, IAG, was the biggest faller on the FTSE 100 on Monday morning, down 14% at one stage. Shares in the FTSE 250 pubs group Mitchells & Butlers were down 13%, while JD Wetherspoon fell 8%.

The transport secretary, Grant Shapps, said the government could not wait for deaths to start rising before taking action.

London was not alone in big falls in share prices. Markets in the rest of Europe were also affected by concerns that measures to prevent the virus spreading would lead to slower growth, higher unemployment and a higher rate of business failures. The 3% fall in the FTSE 100 was matched by similar drops in Milan, Frankfurt and Paris.

“Concerns are rising that the summer recovery is probably as good as it gets when it comes to the recent rebound in economic activity,” said Michael Hewson, the chief market analyst at CMC Markets UK.

“This reality combined with the growing realisation that a vaccine remains many months away, despite [Donald] Trump’s claims to the contrary, has made investors increasingly nervous, as we head into an autumn that could see lockdowns reimposed.”

More here:

After a sizzling August, stock markets have come down with a bump in September.

We just had the best August since 1986, with soaring tech stocks helping to push the MSCI’s All County World index of stocks up by 6% during the month.

But most of those gains have now been lost in September, with the EU-wide Stoxx 600 now at its lowest level since early August.

Dmitri Smolansky, Portfolio Manager at SECOR Asset management, explains:

By the end of August, equity markets have priced in a reasonably benign scenario for COVID 19 developments. The recent increase in the number of COVID 19 cases in Europe and expectations about the second wave in the US resulted in the increased uncertainty about the future pace of global economic recovery.

European companies tend to have significant exposure to global growth and, therefore, are suffering.”

Germany’s central bank warned this morning that the recovery in Europe’s largest economy is slowing.

In its latest monthly analysis, the Bundesbank predicted that the rebound would lose momentum.

It pointed out that the early jump in factory orders after lockdown eased has now faded.

“In the remainder…