It was an eerie day for the S&P/ASX 200 Index (ASX: XJO) yesterday as the market failed to hold its opening gains. The weakness that began to show itself took off overnight with the German DAX index slumping 3.7% while there were falls across the board for United States indices. This looks set to continue today with the ASX 200 opening lower this morning.
On a more positive note, while the Dow Jones Industrial Average Index (DJX: .DJI), Nasdaq Composite (NASDAQ: .IXIC) and S&P 500 Index (SP: .INX) all fell within the range of 1.6% to 2.3%, they all closed well above their lows in last night's session.
Soaring COVID-19 cases in the US and Europe
The US, Russia and many European states have set new daily records for COVID-19 cases. There are now more than 43 million people that are reported to have been infected by the coronavirus globally and more than 1 million have died.
But it is perhaps the trajectory of cases across Europe that is most worrisome. France, Spain, Italy, Germany and the United Kingdom all recorded seven-day rolling averages of approximately 5,000 cases back in April. This was seen as the peak and as lockdown measures kicked in, daily confirmed cases quickly headed back down.
Today, these countries are all setting record increases, and not by a fraction, but many times over. France faces its biggest coronavirus challenge yet after posting more than 50,000 daily cases for the first time on Sunday. Other European countries have recorded daily cases within the range of 10,000 to 20,000, greatly overshadowing April cases.
Governments have been reluctant to impose lockdown measures that curbed cases at the start of the year at the expense of the economy. But as new cases start to beat old records many times over, Europe is bracing for new lockdown measures.
Italy's prime minister on Sunday announced new lockdown measures for bars, restaurants and public gatherings in an attempt to avoid a full blown nationwide lockdown. The new decree discourages movements across regions, but no limitation will be introduced by law.
European countries have opted for less extreme lockdown measures than what we have experienced in Victoria. While there are pros and cons to both approaches, it will be interesting to see which practice will lead to better outcomes for Europe's communities and economy.
ASX 200 opens lower
The doom and gloom weighed on the economic outlook as global financial markets took a significant hit overnight. This is playing out on our own ASX this morning with the ASX 200 falling 0.82% in the first 15 minutes of trade.
