NEW YORK (AFP) – World equity markets suffered heavy losses Monday (Sept 21) as investors reacted to mounting fears of a second coronavirus wave and diminishing odds of another US stimulus bill as partisanship intensifies ahead of the presidential elections.
Crude oil prices plunged, owing to expectations for less demand just as more supply from Libya becomes available, traders said.
The banking sector was also rocked by an international media probe that claimed massive sums of allegedly dirty money had flowed for years through some of the world’s largest banks.
London stocks fell by 3.4 per cent after Health Minister Matt Hancock warned Britain’s coronavirus crisis was at a “tipping point”, fuelling expectations of more restrictions aimed at curbing Covid-19 as government experts said cases could mushroom.
“Virus fears have come back to haunt investors today, as concern rises that the consumer-led recovery is going to falter if lockdowns are re-introduced,” noted Fawad Razaqzada, an analyst at ThinkMarkets.
“Stocks have tanked, the dollar has jumped, and the pound has been pounded,” he added.
Wall Street also had a losing day, although equities clawed back from session lows in apparent bargain-hunting.
The Dow Jones Industrial Average ended at 27,147.70, down 1.8 percent or around 510 points, but more than 400 points above session lows.
Hopes of another round of US stimulus spending took a hit with the death of US Supreme Court Justice Ruth Bader Ginsburg, which has sharpened already significant partisan differences in Washington ahead of the US presidential election on November 3.
Ginsburg’s death “means the political scene now seems more hostile, decreasing the possibility of a stimulus deal getting done,” said TD Ameritrade’s JJ Kinahan in a note.
Russ Mould, at the online broker AJ Bell, added that “travel stocks again faced severe turbulence amid the rising fears over new (government) restrictions.” Most Asian bourses had already fallen sharply earlier in the day.
Shares in major banks dived after BuzzFeed News and the International Consortium of Investigative Journalists published findings over dirty money allegedly flowing through the banking system.
“Profits from deadly drug wars, fortunes embezzled from developing countries and hard-earned savings stolen in a Ponzi scheme were all allowed to flow into and out of these financial institutions, despite warnings from the banks’ own employees,” according to the probe.
Banks replied that they have been working for several years with national regulators to address many of the issues raised in the report.
Also, the industry noted that law enforcement sometimes request banks keep a client relationship ongoing to support further investigations.