You are here: Home » International » News » Markets
Business Standard

Europe lockdown fears knock stocks, spark dash for bonds

Markets went into a tailspin after news that Austria will become the first country in western Europe to reimpose a full coronavirus lockdown

Coronavirus | Europe

Reuters  |  LONDON 


European stocks retreated from record highs, while government bond yields, oil prices and the euro tumbled on Friday as the specter of a fresh COVID-linked lockdown in Germany and other parts of cast a fresh shadow over the global economy.

went into a tailspin after news that Austria will become the first country in western to reimpose a full lockdown to tackle a new wave of infections and that Germany could do the same

Germany's health minister Jens Spahn warned the situation in Europe's biggest economy was so grave that a lockdown, including for those vaccinated, cannot be ruled out.

"A total lockdown for Germany would be extremely bad news for the economic recovery," said Ludovic Colin, a senior portfolio manager at Swiss asset manager Vontobel.

"It's exactly what we saw in July, August of this year in parts of the world where the Delta was big, it (COVID-19) came back and it slows down the recovery again."

The news fuelled a dash for so-called safe assets such as government bonds, the dollar and the yen.

As the dollar surged 0.5%, the euro plunged to $1.1283, heading back towards a July 2020 low hit earlier this week . European and U.S. bond yields tumbled 5-6 basis points while equity reversed early-session gains.

While the pan-European STOXX 600 index slipped a quarter of a percent, Italian and Spanish shares slid more 1% and growth-sensitive banking stocks plunged almost 3%.

The shares later clawed back some of those knee-jerk losses.

But the effects rippled across world markets, taking Wall Street futures lower, while Brent crude futures dropped below $80 a barrel, extending earlier losses.


It was a day for safe-havens assets to step back into favour.

Japan's yen rallied a third of a percent versus the dollar to 113.93 and the greenback index surged back towards 16-month highs hit recently.

Government bonds, battered in recent weeks by high inflation and expectations for higher interest rates, saw a sharp rally.

It took Germany's 30-year bond yield back below 0% for the first time since August which mean the country's entire yield curve is in negative territory.

Germany's 10-year yield, the euro area benchmark, fell to the lowest since mid-September at -0.33%, down 5 basis points, having started the day a touch higher.

U.S. and British yields fell 3-5 bps.


Asian earlier in the day had their share of gloom, as e-commerce giant Alibaba reported disappointing earnings, reinforcing worries about slowing Chinese economic growth

MSCI's Asia-Pacific index excluding Japan fell 0.44%, after Alibaba's 10% share price loss.

Poor performance by Baidu, and Bilibili, whose shares are suspended, reinforced the downward trend.

Finally, Bitcoin slipped to the lowest since mid-October and is set for its worst week in six months -- 20% below recent record highs.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, November 19 2021. 17:05 IST