Stocks down sharply as virus cases continue to rise vertically.

26/10/2020

The risk-off sentiment characterized Monday's trading, and US indices were down more than 1% during the London session. EU bourses were trading 2-3% lower as most of the companies in those indices are from the cyclical sector, which is slowly (or quickly) going bankrupt.

Europe continues to be struck by the second wave of the Covid-19 virus. France reported record new infections for four consecutive days on Sunday. Italy also reported a jump in infections and has introduced the strongest virus restrictions since the end of a national lockdown in May. 

Additionally, Spain will impose a national curfew, having declared a national emergency state at the weekend. The Czech Republic went into a light lockdown and closed all non-essential stores, while Slovakia imposed a curfew during the day. Poland and Hungary imposed new restrictions as well. 

In the US, the situation is grim as well. The United States reported 85,000 new infections twice in a row, a new record since the pandemic began.

On the other hand, it looks like there will not be a new fiscal stimulus until the elections, reinforcing the bearish view in the markets. 

Later in the day, German IFO business surveys are due, and the actual numbers might actually be well below expectations as the economic situation is deteriorating. 
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