Shares dropped in Europe and Asia on Friday after the latest data drove home the extent of economic carnage from the coronavirus pandemic.
Many world markets were closed for May Day holidays. Britain’s FTSE 100 sagged 2 percent to 5,781.91 while US futures fell sharply, with the contract for the S&P 500 down 2.2 percent at 2,838.90. The future for the Dow industrials sank 2 percent to 23,746.00.
Overnight, the S&P 500 fell 0.9 percent on the dismal jobless data and news that the economy of countries using the euro contracted 3.8 percent in the last quarter, its biggest slump since the EU began keeping reporting such data in 1995.
London stocks sank Friday in early morning deals, extending the previous day’s heavy selloff on poor global economic data, while Frankfurt and Paris were shut for public holidays.
The British capital’s FTSE 100 index of major blue-chip companies lost 2.3 percent to stand at 5,763.04 points, compared with the closing level on Thursday.
“Stocks are softer once more, though most of Europe is on holiday so the focus is on London until New York opens,” noted Markets.com analyst Neil Wilson.
He added that equities had “turned broadly weaker yesterday as investors reacted to some stinky data from Europe and the US.”
Markets had plunged on Thursday after economic growth data confirmed fears of COVID-19’s bruising impact on the world economy.
Australia’s S&P/ASX 200 plunged 5 percent to 5,245.90 with heavy losses in miners and banks. A measure of Australian manufacturing showed activity contracting at its worst pace since 2009. That, coupled with news overnight that millions more Americans applied for unemployment benefits in April, darkened the mood after a relatively strong April.
Signs of growing tensions with China, Australia’s biggest trading partner, added to jitters. The two governments are at odds over calls for an independent inquiry into the origins of the coronavirus, with China warning of possible repercussions for imports from the resource-rich country.
Japan’s Nikkei 225 index slipped 2.8 percent to 19,619.35 as the economy minister, who is heading the government’s coronavirus efforts, said social distancing measures needed to be kept in place to help prevent a resurgence of infections.
“If we relax the measures with insufficient decrease, infections will immediately bounce back and our effort so far will entirely go to waste,” said the minister, Yasutoshi Nishimura. “The experts recommended that the current measures should be kept in place.”
The U.S. jobless figures brought the total of people filing for unemployment to 30 million in just six weeks. Other data showed consumer spending plunged a record 7.5 percent in March from the month before, a dire blow for an economy where such spending makes up 70 percent of the total.
“Maybe it was the whole month-end malaise, or maybe they just need to hear something new and impactful, and that we’re ultimately seeing buying fatigue,” Chris Weston of Pepperstone said in a commentary.
Promises from the Federal Reserve and other central banks to do whatever it takes to get economies through the coronavirus crisis have supported buying by investors betting that a recovery will come soon. Professional investors say that optimism may be premature.
The yield on the 10-year Treasury edged down to 0.60 percent from 0.63 percent late Thursday. It started the year close to 1.90 percent. Treasury yields tend to fall when investors are downgrading their expectations for the economy and inflation.