Experts are warning of a double-dip recession as European and Asian stock markets weaken over investor uncertainty over tighter coronavirus lockdown measures across Europe and the US.
European stock markets have tanked at the open as investors fretted over speculation about the imminent introduction of tighter lockdown measures to combat soaring coronavirus infection rates, dealers said.
In initial deals, the benchmark Paris CAC 40 shares index nosedived 3.2 percent to 4,579.89 points, Frankfurt's DAX 30 tumbled 2.9 percent to 11,709.39 and London's FTSE 100 sank 2.2 percent to 5,605.59. Other markets were also down sharply.
The Dow and S&P 500 both fell again, though the Nasdaq edged up as traders bet tech firms will benefit from people being forced to stay home.
"The double whammy of fears of further lockdowns crimping any tentative economic recovery in the UK and Europe, and a follow through of overnight weakness from the US based partly on the lack of further stimulus, have had a negative impact on investor sentiment," Interactive Investor analyst Richard Hunter said.
European leaders are being forced to revert to strict, economically damaging measures to control the spread of the virus as some record a spike in deaths and new cases.
And with the United States also suffering a resurgence, there is a fear that the already stuttering global economic recovery will be thrown off track. Some experts have warned of a double-dip recession.
Weight on Asian markets
With US lawmakers unlikely to agree on any new rescue package before Tuesday's election, analysts said the new wave of virus infections and lingering uncertainty over the vote would mean equities face a wobbly few days.
Tai Hui at JP Morgan Asset Management said the surge in infections in the US and Europe had been expected in the northern hemisphere winter, adding it "should push investors to take a more defensive position for the time being. In the very short term, the US elections would reinforce this conservative bias."
However, no matter the outcome, the result of the vote "should provide the certainty that investors are constantly looking for."
Tokyo, Hong Kong, Mumbai, Taipei, Singapore and Manila were in the red, but Shanghai, Seoul and Wellington rose.
Sydney was lifted as Australia's second-biggest city Melbourne enjoyed its first day of being open again after a monthslong lockdown.
The impact of this year's lockdowns and travel restrictions was laid bare on Tuesday as the World Tourism Organization said tourism had collapsed 70 percent, leading to a $730-billion loss in revenues, while the UN's trade body said foreign direct investment was likely to slump 40 percent.
Tougher restrictions, fresh shutdowns
French President Emmanuel Macron will address the nation on Wednesday evening to present tougher restrictions to counter an alarming surge in coronavirus cases as doctors warned many hospitals are just days away from being overrun with patients.
German Chancellor Angela Merkel is meanwhile seeking drastic new curbs, including fresh shutdowns hitting leisure, sports and the food and drink sectors, in crisis talks with Germany's regional leaders to save the Christmas holiday season.
"It is becoming increasingly apparent that rising infection rates across Europe are now translating into a rise in hospitalisations, as well as a rising death count, with both the UK and France posting their highest fatality levels since May as the second coronavirus wave continued to spread across Europe," said CMC Markets analyst Michael Hewson.
"Concerns about a second national lockdown in France are also rising ahead of a scheduled national address later this evening by French President Emmanuel Macron.
"In Germany it is also being reported that Chancellor Merkel is proposing the closure of bars and restaurants for one month, in a move that could well last a lot longer as the weather gets colder."