An increase in infections in the US and worldwide, in conjunction with the World Health Organisation’s raising concerns of the risk of a second wave, is causing worries among investors.
The deteriorating health situation poses the threat of a halt to the global and American economic recovery.
For Quincy Krosby, head of market strategy at Prudential Financial, “It is not only the increase in the number of cases, but also the increase of hospitalisations” that is tormenting the market.
White House chief immunologist Dr. Anthony Fauci on Tuesday said he was concerned about the “worrying” surges in the number of cases in several American states. “The next two weeks will be critical,” he said.
The International Monetary Fund (IMF) has forecast of global recession of 4.9% this year. This is much worse than the 3% expected in April, at the height of the pandemic, when the IMF stressed that this was the worst crisis since the Great Depression of the 1930s.
In the United States, GDP is expected to collapse by 8%, well beyond the 5.9% decline estimated in April.
As several European countries are moving forward with their lockdown exit strategies, European WHO director Hans Kluge urged caution on Thursday in an online press briefing, and said many countries were already at risk of seeing the virus flare up again.