Statsguru: Why second wave of Covid-19 is a worry for equity markets

Equity markets across the globe witnessed a huge spurt over the past month on optimism that the reopening of the economies will lead to a sharp recovery in growth (chart 1). 

However, investors have got a reality check with many countries once again seeing a rise in Covid-19 cases, sparking fears that a second wave could impede the nascent economic recovery. Also, the US Federal Reserve's dire assessment of economic prospects spooked investors. A sharp 7 per cent fall in the US markets on Thursday — the biggest single-day fall since March — sent most global markets tumbling (chart 2).