Global markets fell on Wednesday as investors assessed stark economic warnings and growing fears of a second wave of coronavirus infections in Europe.
In the US, stocks fell after Federal Reserve chair Jerome Powell issued yet another warning about the duration of the economic crisis.
Powell said on Wednesday that the US could face an “extended period” of weak growth and stagnant incomes, noting that the recovery “may take some time to gather momentum.”
Slightly better-than-expected gross domestic product (GDP) data from the UK was not enough to placate European markets.
UK economic output declined by 2% in the first three months of 2020, its fastest quarterly contraction since the 2008 financial crisis.
In March, when the UK-wide coronavirus lockdown was first implemented, GDP fell by 5.8% compared with February, the largest monthly contraction since 1997, when such records began.
“There was no real let up for Europe on Wednesday morning,” said Connor Campbell, a financial analyst at Spreadex, who noted that the GDP figures were merely the “amuse bouche” before an “utter collapse” in the second quarter.
The Bank of England last week warned that the country was on the precipice of its worst recession in over 300 years.
“Over in the eurozone, the region’s indices were worse off, in part because they are ahead of the UK with their lockdown-easing measures, and therefore are already seeing the potential threat of a second wave of coronavirus cases,” Campbell said.
The European Commission on Tuesday (12 May) warned member states to prepare for an “eventual” second wave of cases, advising them to enhance their surveillance operations.
In Germany, four municipalities are scrambling to contain new outbreaks in order to avoid breaching a threshold that would require them to reintroduce lockdown measures.
The losses in Europe and the US followed a mixed trading session in Asia.