# Stocks on worst run in 18-months amid global COVID-19 surge
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-19
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Global markets tumble amid rising COVID cases and economic
Meta Description: Bond yields drop, stocks fall as coronavirus cases surge worldwide, impacting economies and sparking concerns about future lockdowns and economic growth.
URL: https://financedigest.com/stocks-on-worst-run-in-18-months-amid-global-covid-19-surgehtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2021-07-19t022656z2lynxmpeh6i00prtroptp4global-markets-1736838160699-compressed.jpg)

By Marc Jones

LONDON (Reuters) – Risk-aversion ruled on Monday as a surge in worldwide coronavirus cases drove down bond yields and left stocks facing their longest losing streak since the pandemic first hit global markets 18 months ago.

Summer markets were suddenly stormy. Europe’s STOXX 600 saw its worst morning in two months and London’s FTSE fell over 2% as Britain’s ‘freedom day’ when it lifted [COVID restrictions was overshadowed by its double-jabbed health minister contracting](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening") the virus.

Asia had seen Japan’s Nikkei and [Hong Kong’s](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong") Hang Seng drop 1.3% overnight too. [Cases hit](https://www.financedigest.com/u-s-coronavirus-cases-hit-new-high-hospitalizations-creep-up.html "U.S. coronavirus cases hit new high, hospitalizations creep up") an 11-month high at the weekend in Singapore. Thailand had its highest single-day increase since the pandemic began and Sydney’s construction [workers were told to down tools after cases](https://www.financedigest.com/amazon-loses-bid-to-throw-out-case-by-uk-drivers-seeking-worker-rights.html "Amazon loses bid to throw out case by UK drivers seeking worker rights") rose there as well.

[Wall Street futures down nearly 1% although it was good news for those holding safe-haven government bonds or the dollar](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease"), which climbed to a more than three-month high.

Natwest’s Global Head of Desk Strategy, John Briggs, said the chances of broader lockdowns being needed again were growing and also China’s economy was slowing, meaning a recent [surge in commodity prices](https://www.financedigest.com/explainer-oil-price-surge-changes-ecb-narrative-only-at-the-margins.html "Explainer-Oil price surge changes ECB narrative only at the margins") could be peaking although oil is now expensive enough to be a weight on many economies.

Where all this comes out of the wash for me is that with this narrative [gaining traction](https://www.financedigest.com/digital-health-market-size-to-gain-traction-of-us-536-6-billion-growth-opportunities-by-2025-transparency-market-research.html "Digital Health Market Size to Gain Traction of US$ 536.6 Billion, Growth Opportunities by 2025: Transparency Market Research"), it is clearly more bullish for the U.S. dollar,” Briggs said.

He said that if COVID-19 cases rise again, factors to consider included which [countries have the highest vaccination rates](https://www.financedigest.com/ecb-hikes-rates-throws-lifeline-to-indebted-countries.html "ECB hikes rates, throws lifeline to indebted countries"), their appetite for social restrictions and their fiscal appetite.

“The U.S. [comes out on top](https://www.financedigest.com/banks-still-have-a-way-to-go-to-come-on-top-in-the-race-to-become-digital.html "Banks still have a way to go to come on top in the race to become digital") of all these,” Briggs added. “We are in a period of renewed US exceptionalism … So all this is bullish for the USD.”

In Europe’s [stock markets](https://www.financedigest.com/compelling-tips-to-make-profitable-investments-in-the-stock-market.html "Compelling Tips to Make Profitable Investments in the Stock Market"), COVID angst saw travel and leisure stocks fall to their lowest level of the year. Shares of cruiseship operator Carnival, airlines easyJet and British Airways-owner IAG, and the UK’s Restaurant Group and [Cineworld cinema chain](https://www.financedigest.com/movie-chain-operator-cineworld-files-for-u-s-bankruptcy.html "Movie chain operator Cineworld files for U.S. bankruptcy") all fell between 5% and 6%.

It wasn’t just COVID crushing the mood either. China’s supersized tech trio Baidu, Alibaba and Tencent had sank 2.5% – 3% overnight after a Shanghai [court at the weekend posted a list of “typical unfair competition cases”](https://www.financedigest.com/belgian-court-decides-to-keep-eu-corruption-case-suspect-in-detention.html "Belgian court decides to keep EU corruption case suspect in detention").

![](https://www.globalbankingandfinance.com/wp-content/uploads/2021/07/Pasted-image-1626690579547.jpg)

PERMANENTLY CHANGED?

[Oil prices](https://www.financedigest.com/oil-prices-steady-after-u-s-stockpile-swell.html "Oil prices steady after U.S. stockpile swell") sank more than 2% after the OPEC group of producing nations overcame a recent spat and agreed to boost output in a hastily arranged meeting on Sunday.

Brent crude was down $1.70 at a [five-week low](https://www.financedigest.com/oil-slumps-5-to-five-week-low-amid-us-debt-default-fears.html "Oil slumps 5% to five-week low amid US debt default fears") of $71.85 a barrel. U.S. crude fell a similar amount to $70.59 a barrel.

[Global economic](https://www.financedigest.com/global-economic-crisis-strangling-progress-for-poor-warns-u-n-development-chief.html "Global economic crisis strangling progress for poor, warns U.N. development chief") growth is beginning to show signs of fatigue as many countries, particularly in Asia, struggle to curb the highly contagious Delta variant of the novel coronavirus and have been forced into some form of lockdown.

[Investors are also worried](https://www.financedigest.com/uk-stocks-slip-as-rate-hike-worries-grip-investors.html "UK stocks slip as rate hike worries grip investors") about the spectre of elevated inflation, which the market has long feared.

[Economists at Bank](https://www.financedigest.com/bank-of-england-names-former-goldman-economist-pill-to-top-economics-role.html "Bank of England names former Goldman economist Pill to top economics role") of America downgraded their forecast for U.S. economic growth this year to 6.5%, from 7% previously, but maintained their 5.5% forecast for [next year](https://www.financedigest.com/the-next-upcoming-years-to-see-the-gastric-electric-stimulators-market-grow-kinetically.html "The Next Upcoming Years To See The Gastric Electric Stimulators Market Grow Kinetically").

As for inflation, the bad news is it’s likely to remain elevated near term,” they said in a note, pointing to their [latest proprietary inflation](https://www.financedigest.com/ftse-100-hits-3-week-high-unfazed-by-latest-inflation-surge.html "FTSE 100 hits 3-week high, unfazed by latest inflation surge") meter, which remains high.

“The good news is … we are likely near the peak, at least for the next few months, as base effects are less favourable and shortage [pressures rotate away from goods towards services.”](https://www.financedigest.com/how-communication-technology-can-help-relieve-pressure-on-staff-in-the-financial-services-sector.html "How communication technology can help relieve pressure on staff in the financial services sector ")

In bond markets, the move to safe-haven assets meant the [recent fall in yields](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") continued. Germany’s 10-year bond yield was at its lowest [since late March at -0.369% ahead of an ECB meeting this week](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010"). U.S. [Treasury yields](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") slipped to 1.265% and have fallen for 11 of the last 15 trading sessions.

Action in the currency market [lifted the dollar](https://www.financedigest.com/shares-steady-dollar-dips-as-us-holiday-lifts-rates-gloom.html "Shares steady, dollar dips as US holiday lifts rates gloom") 0.3% against a basket of major currencies to 92.976.

But it [failed to make ground against the Japanese yen – the dollar/yen currency pair traded below the 110 yen per dollar](https://www.financedigest.com/analysis-g7-fails-to-reach-intervention-deal-to-ease-pain-of-soaring-dollar.html "Analysis-G7 fails to reach intervention deal to ease pain of soaring dollar") mark at 109.85, leaving the yen 0.2% higher on the day.

Britain’s sterling hit a three-month [low against the dollar](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") at $1.3706 after its health minister Sajid Javid had tested positive for COVID-19. That forced Prime Minister Boris Johnson and [finance](https://www.financedigest.com/scottish-finance-minister-kate-forbes-to-run-for-countrys-leadership.html "Scottish finance minister Kate Forbes to run for country’s leadership") minister Rishi Sunak to quarantine on Sunday.

[“Despite rising](https://www.financedigest.com/suedzucker-quarterly-profits-surge-73-5-despite-cost-rise.html "Suedzucker quarterly profits surge 73.5% despite cost rise") vaccination rates, a return to pre-corona normality seems questionable,” Ulrich Leuchtmann, head of FX and commodity research at Commerzbank, wrote in a research note.

(Additional reporting by Karin Strohecker; Editing by Timothy Heritage and Edmund Blair)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---