Indices around the world have begun to recover after plummeting in recent days, following fears about a new wave of the coronavirus.
The DAX, S&P 500, Dow Jones Industrial Average, FTSE 100, Nasdaq Composite, and Nikkei 225 all dropped sharply from Monday and Tuesday last week. While the S&P 500 and Dow Jones Industrial Average marked brief and slight increases after this point, both indices subsequently dropped precipitously.
Apart from the Nikkei in Japan, which hits its nadir on Tuesday, all the indices reached above their lowest points on Monday this week (Japan being eight hours ahead may account for the difference).
From highs between 12 July and 15 July, the six indices fell sharply:
- DAX – 15,790.51 to 15,123.20,
- S&P 500 – 4,374.30 to 4,258.49,
- Dow Jones – 34,987.02 to 33,962.04,
- FTSE – 7,124.72 to 6,844.39,
- Nasdaq – 14,733.24 to 14,274.98,
- Nikkei – 28,178.24 to 27,388.16.
However, by yesterday, all of them had made substantial-if-only-partial recoveries.
Delta disaster in the making?
The Evening Standard in London was quick to link the falling of the FTSE 100 to the UK’s gambit of reopening the country, without restrictions, on 19 July. Labour shortages arising from an increased number of infections was given as the main driver of the fears shaking the market.
Reuters quoted Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, as saying: “Much of it is related to the Delta (variant). There’s some concern too that maybe the economy is not going to open up as quickly as everyone thinks, and the big boom that everyone’s expecting is going to be more of a pop than a boom. We’re woefully off of breakneck economic growth, and judging by the activity we’re seeing we’re overestimating a lot of the economic reports.”
However, by late Wednesday, with much of the markets recovering, the reporting was more upbeat, with The Guardian called it the FTSE 100’s ‘best day since February’.
Also writing for the paper, Nils Pratley said: “The rise in the Delta variant has altered the mood, but the underlying economic odds haven’t changed very far in a matter of days. The ‘UK experiment’ in dropping restrictions, as Deutsche Bank’s analysts called it, will be closely watched from elsewhere, but hard results will be weeks or months away. In the meantime, expect only a volatile summer for stock markets.”