US stocks fall as coronavirus fears return
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US stocks have opened lower following one of Wall Street’s best three-day runs in history as economic concerns about the coronavirus outbreak once again weighed on investors’ minds.
The S&P 500 index was down 3.6 per cent in early trading, the Dow Jones was four per cent lower and the Nasdaq had fallen 3.7 per cent.
US stocks are still up for the week, however, with the S&P and Dow around 10 per cent above their Monday positions.
Markets rallied over the last three days after the US Federal Reserve said it would buy bonds in potentially unlimited quantities and Congress agreed on a $2 trillion (£1.7 trillion) stimulus bill to deal with the fallout from Covid-19.
Yet many analysts have cautioned against seeing the climb as the start of a recovery in asset prices.
“While the marked 15 per cent bounce in markets in the last few days is undoubtedly encouraging, it is not on its own a reliable sign that we have necessarily seen the bottom,” said Rupert Thompson, chief investment officer and investment firm Kingswood.
He added that the financial crisis of 2008-9 “saw a couple of rallies of similar magnitude following the collapse of Lehmans only for equities subsequently to hit new lows”.
Investors appeared to share Thompson’s view today, with European markets also lower. The FTSE 100 was down 6.6 per cent in afternoon trading, the Europe-wide Stoxx 600 was down 3.9 per cent and Germany’s Dax was 3.9 per cent lower.
Government bonds rallied as traders bought so-called safe-haven assets. The US 10-year Treasury yield fell 11 basis points (0.11 percentage points) to 0.741 per cent. The German 10-year Bund yield dropped 12 basis points to minus 0.482 per cent.
Didier Saint-Georges of asset manager Carmignac said: “We doubt that markets will be out of the woods after one month of correction, however steep.”
“Besides, the global economic shock is only beginning to be appreciated, as confinement is spreading to more countries every day.”