Global shares lurch towards biggest one-month drop since March as COVID cases explode; earnings rattle Apple, Facebook and Amazon

Global shares lurch towards biggest one-month drop since March as COVID cases explode; earnings rattle Apple, Facebook and Amazon
S&P index displayed on a smartphone screenPavlo Gonchar/SOPA Images/Getty Images
  • Global equities head for their biggest monthly slide in October since March, with eurozone blue chips among the worst-hit, as the pandemic hits Europe.
  • US stock futures ease, suggesting a drop at the opening bell for technology stocks, after Apple, Amazon, Facebook and Google parent Alphabet reported earnings.
  • "The optimism of the summer has been replaced by a sense that it is going to be long winter," CMC Markets analyst David Madden said.

Global shares fell on Friday, on course for their worst monthly slide since March, after worldwide daily cases of COVID-19 topped half a million and as investor caution mounted, just days ahead of an uncertain US presidential election.

US stock futures fell between 0.6-0.7%, with futures on the technology-heavy Nasdaq 100 showing the largest decline, down 1%, following a slew of quarterly earnings the previous day from some of the index's mega-caps, including Apple, Facebook and Google parent Alphabet.

On the European markets, Stoxx 600 was down 0.2%, with declines in retail and healthcare shares acting as the biggest drags on the overall index, while travel and leisure and oil stocks -- some of this month's worst laggards -- remained in the black.

National lockdowns in economic powerhouses such as Germany and France, as well as new restrictions in Italy and a full lockdown in Ireland have weighed heavily on investors in euro zone assets. The Stoxx 50, which holds the 50 biggest euro zone blue-chip stocks, has lost 8% this month, compared with a 5.6% fall in the broader 600-strong European benchmark.

"This week there has been turmoil in European stock markets on account of the jump in the number of new Covid-19 cases and the rise in the hospitalization rates," CMC markets analyst David Madden said. "The real damage to market sentiment was on the back of the stricter restriction in countries like Spain, Italy, France and Germany."


"The optimism of the summer has been replaced by a sense that it is going to be long winter," Madden added.

Global equities, as reflected by the MSCI All-World index, are down by nearly 2% this month, their largest one-month drop since March, when the full extent of the coronavirus crisis hit financial markets.

Worldwide cases of COVID-19 rose by a daily record of around 500,000 on Thursday, according to data from Johns Hopkins University, bringing the number of infected people to well above 45 million and deaths to 1.182 million.

Adding to the sense of uncertainty among investors was the US presidential election on November 3. The polls suggest Democrat opponent Joe Biden is ahead of Republican Donald Trump, but given Trump's surprise win four years ago and the potential for the result to be contested, many investors have cut back their exposure to riskier assets.

"Markets continue to grapple with dissonant influences, on the one hand the alarmingly rapid escalation in infection rates and an array of political & economic uncertainties, on the other better than expected earnings reports," Marc Ostwald, chief economist at ADM Investor Services, said.


Apple, Amazon, and Facebook shares tumbled in pre-market trading on Friday after the technology giants reported earnings on Thursday that disappointed investors.

Google-parent Alphabet's stock bucked the "big tech" trend, jumping as much as 6% in pre-market trading after the group posted revenues and profits that crushed Wall Street's expectations.

The sheer size of these companies mean they have a larger impact on the broader markets.

"The earnings beat expectations but by carrying the weight of the market, tech stocks were priced to perfection," London Capital Group analyst Jasper Lawler said. "The trend this earnings season has for been for companies beating estimates to be left unrewarded with gains in the stock price because investor attention is all on the election and COVID."

Elsewhere, the euro edged down against the dollar, the yen and the pound, losing between 0.1 and 0.4%, after the European Central Bank offered its clearest signal yet that more financial support for the eurozone economy could be coming in December.


"We think the intention is clear: by hinting strongly that new stimulus is coming at the next meeting, the ECB aims to avoid the impression that it is insensitive to recent weak data and news of fresh lockdown restrictions across Europe, which cast a dark shadow on economic activity in Q4 and potentially Q1 2021," UBS analysts said in a note.

In commodities, the oil price edged down, having hit its weakest level in five months this week, as more lockdowns and tougher rules on movement have shaken the outlook for demand growth.

Brent crude futures were down 0.3% at $38.14 a barrel, while WTI crude was steady at $36.14 a barrel.

Gold rose 0.5% to $1,876.30 an ounce, while silver rose 0.6% to $23.50 an ounce.