Monday 19 July 2021 8:50 pm | Updated: Monday 19 July 2021 9:04 pm

Global markets plummet as Delta variant fears intensify

Data from the US Labor Department released today showed US inflation hit 5.4 per cent annually in July, the same rate recorded in June

Intensifying fears over the rapid spread of the highly transmissible Delta variant of Covid triggered a sharp sell-off in global markets on Monday.

All US benchmarks nursed heavy losses during today’s session.

The blue-chip S&P 500 and Dow Jones plummeted 1.9 per cent and 2.4 per cent respectively, while the tech-heavy Nasdaq lost 1.4 per cent.

The falls have been driven by rising hospitalisations in developed economies fuelling market expectations that policy makers may have to reintroduce restrictions on economic activity soon, hitting the global recovery.

Yields on 10-year Treasuries pulled back sharply to 1.20 per cent as investors rushed to safe haven assets.

Poor performances among US travel stocks weighed heavily on the benchmarks, with investors predicting that transatlantic travel could be months away.

“From concerns about the reflation trade, we’ve gone full reverse ferret in the face of what is becoming rising worries that spiralling Delta cases could undermine the global recovery story, and prompt new restrictions as we head into the autumn” said Michael Hewson, chief market analyst at CMC Markets UK.

Global oil prices also took a battering, falling back below $70 for the first time in nearly two months amid fears of stagnating demand.

FTSE 100 plummets below 7,000 on Freedom Day jitters

London’s FTSE 100 plummeted below 7,000 on Monday driven by mounting concerns about the rapid spread of Covid as England pushes ahead with ‘Freedom Day’ today.

The capital’s premier market slid 2.48 per cent to 6,838 during the afternoon session. The index briefly hit a two-month low.

Pound sterling lost 0.62 per cent against the greenback to buy $1.36.

The market was hit by investor sentiment souring over fears that parts of the UK may have to reintroduce restrictions on economic activity after England pressed on with the lifting of all Covid measures on Monday.

Travel stocks were among the biggest fallers, pushing the index down.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, said: ‘’The FTSE 100 sell off has accelerated as strong undercurrents of Covid uncertainty wash through the financial markets, with travel stocks among the biggest fallers.”

The domestically-focused mid cap FTSE 250 dipped 2.25 per cent, while AIM shares fell 1.82 per cent during morning trading.

Winners and losers

Takeaway delivery company Just Eat Takeaway.com was a bright spot on an otherwise dreadful day, rising 3.49 per cent.

Publisher Pearson was the second best performer, gaining 1.08 per cent, while value retailer B&M came third, up 0.65 per cent.

Broadcaster ITV was the day’s worst performer, sliding 6.55 per cent on fears that a slowdown in the economic rebound could hit marketing budgets.

Aerospace engineer Rolls Royce was the second worst performer, losing 5.34 per cent on fears that international travel activity is likely to remain suppressed amid high case rates.

Wealth manager St. James’s Place came third, down 5.16 per cent.

Around the world

The global sell-off was extended to Asia, with both of the region’s flagship benchmarks down.

Japan’s Nikkei fell 1.25 per cent on Monday, while Hong Kong’s Hang Seng dipped 1.84 per cent.

European shares fared no better – the Stoxx 600 lost 2.19 per cent.

Danni Hewson, AJ Bell financial analyst, said: “Today is going to hurt and many investors will be crossing their fingers and hoping tomorrow brings another U-turn in fortune.”