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Covid: Asia follows global shares slide amid recovery fears

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Stock markets across the UK, Europe and the US dropped sharply on Monday on fears that rising numbers of Covid cases will hamper economic recovery.

London’s FTSE 100 fell 2.6% to below the 7,000 level, led by broadcaster ITV and British Airways-owner IAG.

In New York, the Dow Jones Industrial Average tumbled by more than 2% while major share indexes in France and Germany also fell.

In England, most remaining Covid restrictions were lifted on Monday.

However, new cases are continuing to rise in some countries fuelled by the Delta variant of the virus. Meanwhile, businesses in the UK have described how they are cutting opening hours, closing shops or may have to reduce production as employees are forced to self-isolate after being alerted by the NHS Covid-19 app.

“The big concern for the market is whether we are going to see a slowdown in the global economic recovery,” said Russ Mould, investment director at AJ Bell.

ITV’s share price fell 6% on concerns that slower economic growth could lead to less spending on advertising. WPP, the advertising giant. also saw its share price drop.

IAG’s share price was the biggest faller among travel, aviation and holiday-related stocks, with airline EasyJet and cruise line operator Carnival also losing ground.

“Optimism which had been on the horizon just a few weeks ago has again been obscured by dark clouds, especially with the snap decision to enforce a 10 day quarantine for arrivals from France,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

“With some scientists warning that infections could reach 200,000 a day by September, there is now a feeling that the UK could be staring at a fresh autumn lockdown,” she added.

“Despite rising vaccination rates, a return to pre-[Covid] normality seems questionable,” said Ulrich Leuchtmann, head of foreign exchange and commodity research at Commerzbank.

At a media briefing, US President Joe Biden urged Americans to get vaccinated in order to ensure the economy can remain open.

Covid infections linked to the Delta variant have been increasing, but concerns among US investors spiked after Los Angeles imposed an indoor mask mandate again over the weekend.

On Monday, the Dow Jones Industrial Average dropped 2.1% in its worst session of 2021. The Nasdaq Composite Index, which hosts a lot of tech companies shed 1.1% to 14,274.98.

The pound also fell against the dollar, dropping 0.45% to $1.371.

Commenting on how markets performed on Monday, President said: “That’s not how I judge economic growth.”

His comments came after data published last week showed prices in the US spiked again in June, driven higher by the cost of used cars and food increasing.

He said that the increase in inflation was expected to be temporary, but he understood that unchecked inflation over the long-term would pose a “real challenge” to the economy.

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