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Stocks retreat on Delta variant gloom

·3-min read
A nighttime curfew imposed to keep the Delta variant at bay is keeping most people off Melbourne's streets

Global stock markets were broadly lower Tuesday as investors fretted that the resurgent Delta coronavirus variant may put the brakes on the global economic recovery.

New Zealand announced a snap three-day national lockdown, which follows a curfew imposed Monday in Australia's second-largest city of Melbourne over a Delta variant outbreak, adding to concern about lockdowns and travel restrictions in China, the world's second-largest economy.

Asian and European markets were lower for the second straight day, while US stocks came off record highs after data showed US retail sales fell 1.1 percent in July.

London's FTSE 100 stocks index was a rare riser after official data revealed a dip in UK unemployment during the second quarter as the economy began to reopen from lockdown.

Separate figures confirmed that the eurozone economy rebounded 2.0 percent in the April-June period.

On the corporate front, shares in BHP surged more than seven percent in London after the giant miner announced a multi-billion-dollar deal to sell its liquid fossil fuels business as it seeks to transition to cleaner energy.

BHP also logged its highest annual profit in almost a decade on runaway copper and iron ore prices, and the stock closed the day with three percent gain.

On Wall Street Monday, the Dow and S&P 500 stocks indices registered record-high closes for a fifth straight session.

This despite the outlook for the global recovery hit by Chinese data this week showing retail sales and industrial production slowing in July.

A rapid growth recovery in China, the world's second biggest economy after the US, has been threatened by renewed localised virus lockdowns and extensive travel restrictions.

The drop in US retail sales may reflect the knock-on effects Covid closures and disruptions are having on economies, as it was driven by a 4.3 percent drop in car sales.

The auto industry has been hammered by a shortage of computer chips amid a boom in demand for electronics as more people stayed home during coronavirus lockdowns, prompting automakers to slow or even stop production at some factories.

"The key takeaway from the report is that there were declines in most retail categories," said market analyst Patrick O'Hare at Briefing.com.

JJ Kinahan at TD Ameritrade said that when cars are excluded the drop is only 0.4 percent.

"Still, when you match that up with a bunch of negative data reads lately including last Friday's sentiment print, it paints a picture of consumers possibly being less willing to spend," he said.

On Friday data was released showing that the University of Michigan's consumer sentiment index had fallen in August to its lowest level since 2011.

"Analysts immediately blamed the Delta variant," added Kinahan.

- Key figures around 1530 GMT -

New York - Dow: DOWN 0.8 percent at 35,331.32 points

EURO STOXX 50: DOWN 0.1 percent at 4,197.39

London - FTSE 100: UP 0.4 percent at 7,181.11 (close)

Frankfurt - DAX 30: DOWN less than 0.1 percent at 15,921.95 (close)

Paris - CAC 40: DOWN 0.3 percent at 6,819.84

Tokyo - Nikkei 225: DOWN 0.4 percent at 27,424.47 (close)

Hong Kong - Hang Seng Index: DOWN 1.7 percent at 25,725.87 (close)

Shanghai - Composite: DOWN 2 percent at 3,446.97 (close)

Euro/dollar: DOWN at $1.1715 from $1.1764

Pound/dollar: DOWN at $1.3745 from $1.3793

Euro/pound: DOWN at 85.24 pence from 85.29 pence

Dollar/yen: UP at 109.60 yen from 109.16 yen

West Texas Intermediate: UP 0.1 percent at $67.38 per barrel

Brent North Sea crude: UP 0.4 percent at $69.79 per barrel

burs-rl/bp

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