European Markets Tank Again; Recession Inevitable

LONDON (AFP) — European stocks dived more than 4% at opening Monday as the coronavirus death toll continued to soar and U.S. lawmakers failed to agree to a trillion-dollar emergency package.

London’s benchmark FTSE 100 index of major blue-chip companies tumbled 4.8% to 4,943.51 points; Frankfurt’s DAX shed 4.6% to 8,521.94 and the Paris CAC 40 sank 4.4% to 3,870.06, compared with Friday’s closing levels.

Empty streets in downtown Barcelona on Sunday portend a grim future for the world economy, as economists say a worldwide recession is all but inevitable. (AP photo/Emilio Morenatti)

Asian equities were also hammered despite vast economic stimulus efforts worldwide, with investors spooked once more by the relentless Covid-19 pandemic.

“Markets are again showing stress on fears that the economic damage will be worse than anticipated and that the response by governments and central banks will not be enough to prevent a mammoth recession,” said analyst Neil Wilson at trading site Markets.com.

James Bullard, president of the St Louis Federal Reserve, said U.S. unemployment could reach 30% in the second quarter due to coronavirus shutdowns, and warned that GDP could decline by 50%. “This would be an unprecedented event.”

The global death toll from the virus has surged past 14,400, with nearly 1 billion people confined and nonessential businesses shut in dozens of countries and growing fears about a worldwide recession.

“Countries across the globe (are adopting) increasingly stricter measures to stop the spread of coronavirus,” said foreign-exchange trader City Index analyst Fiona Cincotta.

“These very measures are threatening to overwhelm central banks’ efforts to cushion the economic fallout from coronavirus, increasing the prospect of a deep global recession.”

© Agence France-Presse

%d bloggers like this: