STOCK markets around the world have crashed due to fears of a second wave of coronavirus will strike.
Markets fell after the US Federal Reserve warned that the US economy faced a long road to recovery.
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In the US on Thursday the Dow Jones Industrial Average was down almost seven per cent.
It lost more than 1,800 points in its worst day since the middle of March.
Tech index Nasdaq lost almost 5.3%, down by more than 500 points.
Shares in European companies were also heavily hit.
The UK’s FTSE 100, Germany’s Dax and France’s CAC 40 were all down by four per cent or more.
Similar falls were also felt in Asia with indexes in Japan, China and Hong Kong all taking a hit, the BBC reports.
As global crude oil prices fell, stocks in energy and travel firms were among those hardest hit.
The news will dent business optimism about rebuilding the economy as countries start to roll back coronavirus restrictions causing problems with people getting back to work after the pandemic and could trigger job losses.
It could hurt the recovery, even if you don’t have a national level pandemic. Just a series of local ones, of local spikes, could have the effect of undermining people’s confidence in travelling, in restaurants and in entertainment
Fed chairman Jerome Powell
Roland Kaloyan, European equity strategist at Societe Generale said: “Government, companies and people would be better prepared for a second wave than for the first one.
“But the problem is there is a limit to governments injecting money.”
The slump came after several weeks of general growth in the financial markets.
US Federal Reserve policymakers said on Wednesday that the unemployment rate could remain above nine per cent by the end of the year – close to the worst level during the crisis.
Fed chairman Jerome Powell warned that this assessment may be overly optimistic if coronavirus infection and hospital admissions start to rise again.
He said: “It could hurt the recovery, even if you don’t have a national level pandemic. Just a series of local ones, of local spikes, could have the effect of undermining people’s confidence in travelling, in restaurants and in entertainment.
“It would not be a positive development.”
The number of cases is rising in nearly half of US states, something that could worsen as summer holidays get under way, Sky News reports.
Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, said: “Not surprisingly, a lack of preventative behaviour has led to a resurgence in COVID-19 cases around the country and the stock market is having another gut check.”
At least 11 countries have reimposed restrictions over fears of a second wave of coronavirus.
Nations including Japan, China, South Korea and Germany have all been forced to reintroduce localised quarantines or widespread shutdowns.
