Europe's 'Corona Lockdown' Resumption as Extreme Measure Shakes Global Stock Markets

Germany and France impose lockdowns again amid COVID spread... Merkel: "Act now to avoid emergency"
Investment sentiment dampened by economic slowdown fears... US also enforces some restrictions
Major US and European indices all plunge

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondents Baek Jong-min and Lee Hyun-woo] As France and Germany imposed drastic measures by reinstating lockdowns to curb the spread of the novel coronavirus infection (COVID-19), stock markets in Europe and the United States plunged simultaneously. Concerns are growing that the economy will face a deep freeze along with the resurgence of COVID-19 during the winter season. The safe-haven asset, the dollar, broke out of its weakness and surged sharply.

According to the Associated Press on the 28th (local time), the German government announced that leisure facilities such as restaurants, bars, cinemas, and concert halls will be closed until the end of November. However, unlike the first wave of COVID-19 in March-April, shops and schools will remain open. Restaurants will also be allowed to offer takeout. German Chancellor Angela Merkel stated, "We must act now to avoid a national health emergency," adding, "Businesses affected by the new partial lockdown measures will receive support, and small businesses will be compensated for 75% of their income."

The French government also reinstated a nationwide full lockdown. Accordingly, movement is prohibited except for purchasing essential goods or medical purposes. In a national address, French President Emmanuel Macron said, "The virus is spreading faster than even the most pessimistic predictions," emphasizing, "France will not pursue a herd immunity strategy. Doing so would result in over 400,000 deaths."

Signs of a similar situation are emerging in the United States. Chicago, Illinois, has suspended indoor dining at restaurants, and Newark, the largest city in New Jersey, has implemented measures to halt non-essential business operations after 9 p.m., among other responses to the spread of infections.

The stock markets plummeted in response to the COVID-19 measures taken by France and Germany, the two pillars of the European economy. The U.S. Dow Jones Industrial Average closed down 3.43% (943.24 points) at 26,519.95, the S&P 500 fell 3.53% (119.65 points) to 3,271.03, and the Nasdaq dropped sharply by 3.73% (426.48 points) to 11,004.87. Earlier, European markets also closed lower, with France's CAC 40 down 3.37%, Germany's DAX 30 falling 4.17%, and the UK's FTSE 100 declining 2.6%. Particularly, the French government's stringent measures have fueled market expectations that consumption will sharply decrease, similar to March.

The resumption of lockdowns in Europe also caused international oil prices to fall, as demand for oil is expected to decline significantly. On the day, December delivery West Texas Intermediate (WTI) crude oil closed at $37.39 per barrel, down $2.18 (5.5%) from the previous session.

On the other hand, as anxiety spread, investment sentiment shifted toward the dollar. According to MarketWatch, the ICE Dollar Index (DXY), which measures the value of the dollar against major currencies, rose 0.57% from the previous day to 93.46. The dollar index had shown recent weakness, falling to 92.5 on the 21st amid optimism that large-scale fiscal spending would follow the U.S. presidential election.

This content was produced with the assistance of AI translation services.