Virus fears weigh on European, Asian stocks, but Fed boosts Wall Street

NEW YORK, USA – European and Asian bourses fell on Monday, June 15, on fears of a second wave of coronavirus infection, while United States stocks shrugged off early weakness following fresh Federal Reserve announcements of emergency lending to support the struggling US economy.

China shut down all indoor sports and entertainment venues in Beijing and undertook a massive test and trace initiative following a COVID-19 outbreak linked to a wholesale food market in the country’s capital.

“More than 100 cases have now been confirmed,” World Health Organization Director-General Tedros Adhanom Ghebreyesus told a virtual press conference, adding that the origin of the cluster linked to the Xinfadi market was still unclear.

“A cluster like this is a concern and it needs to be investigated and controlled – and that is exactly what the Chinese authorities are doing,” WHO emergencies director Mike Ryan said.

The Chinese outbreak came as investors were already anxious over increased coronavirus cases in Texas, Florida, and other US states.

Tokyo, Hong Kong, and Shanghai all tumbled, while bourses in Frankfurt, London, and Paris also retreated.

“The numbers are still very low in the Chinese capital but the risks are high which may explain the apprehension we are seeing in the markets,” said analyst Craig Erlam at trading firm OANDA.

US stocks opened in the red, but reversed by mid-session. The Dow Jones Industrial Average ended at 25,763.16, up 0.6% after regaining more than 900 points from its session low.

The reversal came after the Fed launched its long-awaited Main Street Lending Program to support businesses harmed by coronavirus shutdowns and said it would also begin a highly anticipated program to purchase corporate bonds.

The announcements come a day before Fed Chair Jerome Powell is due to kick off two days of congressional testimony. 

Wall Street has been jittery in recent days as more states have seen an uptick in coronavirus cases. Some analysts have largely dismissed the trend as the result of increased testing, but others have expressed fear the elevated cases could slow the reopening of the economy.

“Falling infection rates have provided investors the confidence that the lockdown approach was working, allowing equity investors to look forward to 2021 as impressive monetary and fiscal policy provide a post-pandemic bridge.

“However, rising new daily COVID-19 cases in 2 of the 3 most populous states in the US will test that resolve.” – Rappler.com