US stocks slump on rising virus cases, fading stimulus hopes

Stock markets retreated Monday with traders increasingly pessimistic that US lawmakers will pass a new stimulus package before next week's election, while spiking virus cases fanned worries about the economic impact of new containment measures.

Despite months of arduous talks in Washington, there appears to be little chance Republicans and Democrats will hammer out a rescue deal to help cash-strapped Americans, with both sides blaming each other for the impasse.

Analysts said investors had essentially given up hope of an agreement and were now betting on Joe Biden and a Democratic sweep of Congress that would open the way for an even bigger spending package in the new year.

Adding to the negative sentiment is a surge of coronavirus cases across the United States and Europe, with the World Health Organization on Sunday reporting a third straight day of record new infections globally.

"Rising Covid cases, no US stimulus and an election next week isn't exactly the recipe for a strong week for equity markets," said Craig Erlam, senior market analyst at Oanda trading group.

"I expect plenty of caution this week," he told AFP, adding that the Frankfurt index was being weighed down much more than European rivals because of a 20-percent drop in the share price of SAP.

The German software giant on Sunday downgraded its outlook for 2020, saying a resurgence in coronavirus cases would weigh on demand from "hard hit" customers.

In afternoon deals, Frankfurt's DAX 30 was down 2.7 percent, while London lost 0.1 percent and Paris was 1.0-percent lower.

Wall Street opened lower, with the Dow falling 1.1 percent.

Oil prices were off around 2.0 percent.

The coronavirus has so far claimed 1.1 million lives and infected more than 42 million people around the world.

The new wave has already forced governments in several countries including Britain, Germany and France to reimpose tough restrictions to prevent the disease from spreading.

"Naturally, growth concerns are at the root of the negative bias since the resurgence of the virus threatens more lockdowns and the lack of a stimulus deal threatens to exclude many struggling businesses and households from the economy," said analysts at Briefing.com.

Traders are also keeping tabs on a key policy-setting meeting of China's Communist Party this week, which is expected to set the course for the world's second-biggest economy for the next several years with an eye on US relations.

Key figures around 1330 GMT

London - FTSE 100: DOWN 0.1 percent at 5,852.18 points

Frankfurt - DAX 30: DOWN 2.7 percent at 12,304.51

Paris - CAC 40: DOWN 1.0 percent at 4,861.53

EURO STOXX 50: DOWN 2.0 percent at 3,134.85

New York - Dow: DOWN 1.1 percent at 28,024.52

Tokyo - Nikkei 225: DOWN 0.1 percent at 23,494.34 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,251.12 (close)

Hong Kong - Hang Seng: Closed for holiday

Euro/dollar: DOWN at $1.1819 from $1.1859 at 2100 GMT Friday

Dollar/yen: UP at 104.98 yen from 104.69 yen

Pound/dollar: DOWN at $1.3025 from $1.3043

Euro/pound: DOWN at 90.74 pence from 90.89 pence

West Texas Intermediate: DOWN 2.0 percent at $39.05 per barrel

Brent North Sea crude: DOWN 1.9 percent at $40.99 per barrel

(Source: AFP)

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