Global stock markets extend losses

LONDON: Global stocks fell further Thursday as investors tracked surging coronavirus infections, vaccine worries, a stuttering economic recovery, and the plight of troubled US retailer GameStop, dealers said.

Asian equities extended losses after Wall Street shed more than two percent overnight, following a gloomy Federal Reserve warning over the virus-plagued US economy.

London sank 1.1 percent nearing midday, while Frankfurt slid 0.7 percent and Paris dropped 0.2 percent in early afternoon trade.

After a months-long rally sent several indices to records or all-time highs, investors have started to fret in recent weeks about a possible correction.

"Stock markets have continued their run of losses from yesterday, as the market rally faces its first real test," said analyst Chris Beauchamp at trading firm IG.

"For a global stock market that has enjoyed such solid gains since November such weakness should not be surprising, but as ever the speed of the drop has come as a surprise.

"The overall rally had slowly lost momentum in recent weeks, and the laws of physics have finally taken effect -- what can't keep going higher has to fall," Beauchamp added.

Sentiment was also battered by struggling video game retailer GameStop.

The US group saw its stock surge about 1,000 percent in two weeks after a group of amateur investors active on online forum Reddit banded together to fight the Wall Street funds that had previously pushed its price lower.

"Equity markets are lower again as fears that some hedge funds are scrambling to close out positions in a bid to offset painful losses they incurred when shorting certain stocks that underwent enormous rallies," added analyst David Madden at CMC Markets UK.

"The Gamestop saga has sparked worries that certain investment firms are rushing for the exit to obtain cash to nurse any painful losses they are enduring.

"Within the past 24 hours, the mood has changed a lot as there is now a feeling that stocks across the board are in for further losses as a cut-and-run mentality is being adopted by some dealers," Madden added.

The dollar meanwhile steadied after the Federal Reserve warned that the US economy was struggling in the face of a new wave of Covid-19 infections that is hammering the northern hemisphere and forcing governments to reimpose strict containment measures.

The Fed said the "pace of the recovery in economic activity and employment has moderated in recent months" and said it would maintain its ultra-loose monetary policy for the foreseeable future.

Chair Jerome Powell added that "overall economic activity remains below its level before the pandemic, and the path ahead remains highly uncertain".

Meanwhile, worries about Covid-19 inoculations are rife, with the US and Europe struggling to get their programmes into gear owing to supply problems.

The European Union and Britain are locked in a row over access to AstraZeneca's jab, with both sides insisting the company uphold contractual delivery promises.

Key figures around 1150 GMT -

London - FTSE 100: DOWN 1.1 percent at 6,497.44 points

Frankfurt - DAX 30: DOWN 0.7 percent at 13,525.61

Paris - CAC 40: DOWN 0.2 percent at 5,447.39

EURO STOXX 50: DOWN 0.4 percent at 3,522.15

Tokyo - Nikkei 225: DOWN 1.5 percent at 28,197.42 (close)

Hong Kong - Hang Seng: DOWN 2.6 percent at 28,550.77 (close)

Shanghai - Composite: DOWN 1.9 percent at 3,505.18 (close)

New York - Dow: DOWN 2.1 percent at 30,303.17 (close)

Euro/dollar: DOWN at $1.2102 from $1.2111 at 2200 GMT

Dollar/yen: UP at 104.30 yen from 104.11 yen

Pound/dollar: DOWN at $1.3665 from $1.3687

Euro/pound: UP at 88.56 pence from 88.48 pence

West Texas Intermediate: DOWN 0.3 percent at $52.69 per barrel

Brent North Sea crude: DOWN 0.2 percent at $55.72 per barrel