FTSE 100, DAX and Dow Jones set to slide, fears of new market slump

Global equities suffered significant losses this week, with the FTSE 100, DAX and Dow Jones all sliding into negative territory, with some investors fearing financial markets are on the cusp of a second Covid-19 driven slump.

  • Global equities suffer losses as fears of a second Covid-19 driven slump mount
  • Dow Jones down more than 600 points on Friday
  • WHO warns that vaccinations won’t be ready until mid-2021

Global equities suffered significant losses this week, with the FTSE 100, DAX and Dow Jones all sliding into negative territory, with some investors fearing financial markets are on the cusp of a second Covid-19 driven slump.

Major indexes around the world did initially showed signs of stabilising in early morning trading on Friday, after enduring sharp declines on Thursday’s session.

But global equities eventually gave way, with the FTSE 100 ending the week 211 points lower (-3.5%), while the German DAX fell by 294 points (-2.2%).

The Dow Jones is suffering the worst of all, however, with it down more than 1400 points over the last two trading sessions and capable of falling even further before the Friday's close.

Investors have grown increasingly concerned about the health of the US economy and its ability to recover from the impact of the coronavirus, after US jobs data disappointed this week, with the Dow Jones witnessing its worst sell-off since June as a result.

The Dow Jones is trading at 27,828 points at the time of publication, with the index down 3% year-to-date.

Long-term outlook remains promising, says IG analysts

The Covid-19 crisis is likely to pass eventually, with central banks and governments continuing to provide supportive policies, according to Chris Beauchamp, chief market analyst at IG.

‘Consumer spending will recover,’ he said. ‘Even the US election will eventually fade into the background.’

‘The market weathered the initial storm of Covid-19, eventually,’ Beauchamp added. ‘It seems like further gains into 2021 and beyond are likely, but after the easy summer of 2020 for equities, a tougher Autumn may lie ahead.’

WHO says Covid-19 vaccinations not ready until mid-2021

Optimism is high due to the number of vaccinations going to trial, but the World Health Organisation (WHO) said that many will not be widespread until at least the middle of next year, with many checks required to test the effectiveness and viability of these vaccines.

‘We are really not expecting to see widespread vaccination until the middle of next year,’ WHO spokeswoman Margaret Harris said at a UN briefing in Geneva.

‘This phase 3 must take longer because we need to see how truly protective the vaccine is and we also need to see how safe it is,’ she added.

Race to find vaccine heats up

The race to find a vaccine is heating up, with AstraZeneca announcing earlier this week that it is holding advanced clinical trials for its own vaccine which it is developing in partnership with Oxford University.

The British-Swedish pharmaceutical company also said that it had struck a deal wit Oxford Biomedica to reserve production lines at the company's new manufacturing plant, after the UK government placing an order to 100 million doses of AstraZeneca’s vaccine.

Meanwhile, GlaxoSmithKline and Sanofi said that they expect to finalise their first set of results from the trial in early December, with the intention of starting a Phase 3 trial later that month.

‘The initiation of our clinical study is an important step and brings us closer to a potential vaccine which could help defeat Covid-19,’ Thomas Triomphe, executive vice president and global head of Sanofi Pasteur, said.

‘Our dedicated teams and partner continue to work around the clock as we aim to deliver first results in early December. Positive data will enable a prompt start of the pivotal phase 3 trial by the end of this year,’ he added.

As the moment there are approximately 160 vaccines being trialled around the world by companies, including Moderna, as well as a partnership between Pfizer and BioNTech.

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