Stocks tumbled across the globe on Wednesday on concerns that rising COVID-19 cases in Europe, the United States and elsewhere will damage already-fragile economic recoveries, while the U.S. dollar rose on safe-haven bids.
Treasury yields fell alongside the price of oil and gold was under pressure from the rising dollar.
On Wall Street, the energy and technology sectors of the benchmark S&P 500 were among the hardest hit.
“Whether you call it a continuation of the pandemic or a third wave of new case discovery – it is the largest concern,” said Art Hogan, chief market strategist at National Securities in New York.
“Unless and until we get through this pandemic, it is hard for investors to imagine a better economic time.”
European shares touched their lowest since late May as Germany and France prepared to announce restrictions approaching the level of the lockdowns in the spring, as COVID-19 deaths across Europe jumped almost 40% in a week.
The pan-European STOXX 600 index lost 3.29%, touching its lowest level since May. MSCI’s gauge of stocks across the globe shed 2.57%.
Asian shares lost ground after initially showing some resilience, in part due to more limited COVID-19 outbreaks and better recoveries in the region’s major economies.
Emerging market stocks lost 1.18%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.69% lower, while Japan’s Nikkei lost 0.29%.
The dollar index rose 0.368%, with the euro down 0.49% to $1.1737.
The Japanese yen strengthened 0.16% versus the greenback to 104.26 per dollar, while Sterling was last trading at $1.3, down 0.33% on the day.
Adding to the mood of uncertainty was the Nov. 3 U.S. presidential election.
Former Vice President Joe Biden has enjoyed a consistent lead over President Donald Trump ahead of the vote. Investors cautiously bet on his victory and a possible “blue wave” outcome, where Democrats control both chambers of Congress.
UBS strategist Vassili Serebriakov said a Biden administration would be seen as de-escalating trade tensions with traditional allies such as Europe and Canada, as well as China, which should improve market sentiment overall and weigh on the dollar as a safe haven.
Benchmark 10-year notes last rose 3/32 in price to yield 0.7693%, from 0.778% late on Tuesday.
The rising coronavirus infections weighed on oil prices on fears of a supply glut and weaker fuel demand.
“Crude oil is under pressure from the increase in COVID-19 cases, especially in Europe, and a larger than expected storage build (in the U.S.),” said Robert Yawger, director of energy futures at Mizuho in New York.
U.S. crude recently fell 5.26% to $37.49 per barrel and Brent was at $39.26, down 4.71% on the day.
Spot gold dropped 1.7% to $1,875.36 an ounce. Silver fell 5.74% to $23.14.