Stock markets around the world have retreated amid growing fears of a second wave of the coronavirus pandemic.
The blue-chip FTSE 100 closed down more than 3% and the domestically-focused FTSE 250 was down 2.8%, with the some of the biggest falls among financial, energy and consumer stocks.
A further 154 COVID-19 deaths in the UK were confirmed by the government on Wednesday, taking the total to more than 43,000, leaving some experts fearing that the reopening pubs and restaurants as early as 4 July could be risky.
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AJ Bell investment director Russ Mould said that while the economic impact of potential measures to contain local outbreaks would be less than another nationwide lockdown, “a recovery of this nature is a messier story for investors to digest and this could act as a drag on equities”.
In March, the FTSE 100 crashed to an eight-year low as thousands of businesses were told to close and people were told to stay home to limit the spread of the virus.
Since then the index has rallied about 25% but its recovery has slowed in recent weeks.
In the US, all three main indexes fell steadily in late morning trading – the S&P 500 down 3%, the Dow Jones losing almost 3.2% and the tech-rich Nasdaq down by 2.7%.
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The S&P 500 and Dow Jones are 8% and 13% down from their respective February record closing highs.
Among the fallers in the US on Wednesday were airlines, resorts, and cruise companies – Royal Caribbean Cruises and Norwegian Cruise Line Holdings both lost around 10%.
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Cruise company Carnival was down 9.3% after ratings agency Standard & Poors downgraded its bonds to junk status on forecasts for weak demand.
It comes as the number of new coronavirus cases in the US hit their highest level in two months, with states including Arizona and Texas reporting record numbers.
The country’s top infectious disease expert Dr Anthony Fauci has warned that the next two weeks could be critical in efforts to contain the virus.
Elliot Savage, portfolio manager of the YCG Enhanced Fund, said: “People are feeling incrementally negative about new coronavirus cases both in the United States and the world. It’s the summer and in fall we have the flu and with the COVID-19 going on it’s a significant concern.”
Also, the International Monetary Fund warned that the pandemic is causing more damage to the world’s economies than first thought.
Advanced economies will be hit particularly hard, it said, with US output forecast to shrink by 8%.
Europe’s markets were also down on Wednesday – Germany’s DAX dropped 2.8%, Italy’s MIB fell by 3.4%, Spain’s IBEX was down 3.2% while France’s CAC 40 slid 2.3%.