Coronavirus News USA

Dow set to fall 600 points as fears of a coronavirus surge grow in the US and China

Dow (INDU) futures were down more than 650 points, or 2.5%, ahead of the opening bell. S&P 500 (SPX) futures dropped 2%, and Nasdaq (COMP) futures were down 1.5%.
Markets across Asia also recorded steep declines after Beijing recorded a fresh cluster of the virus originating in the city’s largest wholesale food market. The Chinese capital has recorded 79 new cases since a locally transmitted infection was reported last Friday for the first time in nearly two months.

China also reported concerning economic data, suggesting that the recovery in the world’s second largest economy is progressing slowly.

Japan’s Nikkei (N225) ended down 3.5%. South Korea’s Kospi (KOSPI) lost 4.8%, closing out its worst day since March. Hong Kong’s Hang Seng Index (HSI) fell 2.1%, and China’s Shanghai Composite (SHCOMP) declined 1%.
European markets broadly declined at open. The FTSE 100 (UKX) dropped 2.4% in London. Germany’s DAX (DAX) fell 2.5%, while France’s CAC 40 (CAC40) declined 2.6%.
For weeks, Wall Street appeared increasingly disconnected from the rest of the world — big stock gains seemed incongruous with relatively high unemployment numbers and other data showing the economy is struggling. But markets have begun to catch up to reality, and despite a small recovery Friday, US indexes are on pace for heavy declines to start this week.
As much of the United States begins to reopen following coronavirus lockdowns, scientists and health experts are warning about the potential for a second wave of the virus, which could have devastating effects for the economy. Several US states that reopened weeks ago are now reporting a rising number of infections and hospitalizations.
A second wave could undermine the extreme optimism about the economy that had catapulted US stocks toward record highs.

In China, meanwhile, signs of another wave of the virus could compound an already sluggish economic recovery.

Industrial production, investment activity and retail sales improved somewhat from prior months, according to data released by China’s National Bureau of Statistics on Monday. Still, the three readings all fell below forecasts from analysts polled by Refinitiv.

“Ultimately it’s consumer’s willingness to leave their apartments amid persistent social distancing — either mandated by governments or by consumer behavior — [that] will dictate the speed of the recovery,” wrote Stephen Innes, chief global markets strategist at AxiCorp, in a research note. “But China’s consumer-led recovery is not moving forward quickly by any stretch of the imagination.”

Even so, some economists pointed to positive signs. Activity in the country’s services sector expanded for the first time this year, according to China’s National Services Industry Manufacturing Index. The index measures the change in output of the services sector each month.

“Overall economic output returned above 2019 levels in May for the first time since the Covid-19 outbreak,” Martin Rasmussen, China economist for Capital Economics, wrote in a research report. “We had previously thought that China’s economy wouldn’t return to positive year-on-year growth until [the third quarter]. But today’s data suggest that this milestone may be reached this quarter.”

Oil also moved lower. US oil futures tumbled 4.1%, to trade at $34.76 per barrel. Brent, the global oil benchmark, lost 3.4% to hit $37.49 per barrel. Brent and US oil prices both plunged more than 8% last week amid concerns of a resurgence of the pandemic.

— Matt Egan and Anneken Tappe contributed to this report.

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