Wall Street finally woke up to the dangers posed by the continuing surge in coronavirus cases in the United States and sold off heavily, aided by forecasts that the US economy is in worse shape than thought.
The 2% plus sell-off on Wall Street saw the ASX 24 futures platform slump more than 90 points, meaning the ASX 200 will plunge at the opening at 10 am today.
The rapidly rising level of infections set off fears of a new round of government lockdowns, compounding worsening forecasts of the economic damage from the pandemic.
The US Wednesday reported the second-largest rise in infections since the health crisis began, with the surge concentrated in states like Florida, Texas, and Arizona where lockdowns were lifted early.
Florida and California reported record infection numbers and hospital ICU beds in Houston, Texas were reported at 97% capacity and in danger of being swamped with new cases.
The 7-day average of daily new COVID-19 cases across the US jumped by more than 30% compared with a week ago, according to a CNBC analysis of Johns Hopkins University data,
At the same time, the governors of New York, New Jersey and Connecticut (among the worst-hit states in the early stages of the pandemic) say all visitors from nine states with high coronavirus infection rates must self-quarantine for 14 days on arrival – a move that will hit the slowly emerging airline sector.
All that Wall Street down sharply – well over 2% as oil and gold also fell.
The Dow shed 710.16 points, or 2.7%, ending at 25,445.94. The S&P 500 slumped 80.93 points, or 2.6%, to end at 3,0501.33.
Even the tech giants are not immune to the impact of fears about COVID-19 as the Nasdaq lost 222.20 points, or 2.2%, finishing at 9,909.17, a day after booking a fresh record closing high on Tuesday.
Shares of US airlines, resorts, and cruise operators slumped. Royal Caribbean Cruises Ltd, Norwegian Cruise Line Holdings Ltd, and Wynn Resorts all tumbled by at least 9% while the NYSE Arca Airline index plunged 7.04%.
Shares in United lost 8% and American Airlines shares fell 6.8%. Carnival Corp, the biggest cruise group saw its shares slide 11% (Its the owner of the ill-fated Ruby Princess)
Overnight trading on the ASX 24 futures platform saw a big fall of more than 90 points at 6.45 am, pointing to a slide when trading resumes this morning.
The International Monetary Fund meanwhile slashed its 2020 global growth forecasts further to a fall of 4.9% from the 3.0% slump announced in April.
The Fund said advanced economies have been harder hit than previously estimated, with US growth now expected to shrink 8.0%, more than 2 percentage points worse than the April forecast.
Australia’s GDP is forecast to be down 4.5% this year, better than most forecasts and significantly better than the 6.7% contraction forecast in April.
