Europe lockdown rattles Wall Street, boosts safe-havens

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Wall Street opened the day mixed, with the tech-heavy Nasdaq posting a record open but the blue-chip Dow dipping on fears the economic recovery could stall.

The Dow Jones Industrial Average fell 0.7%, the S&P 500 lost 0.08% and the Nasdaq Composite added 0.42%.

The MSCI world equity index, which tracks shares in 45 nations, fell 0.16%.

European stocks also retreated from record highs as the specter of a fresh COVID-linked lockdown in Germany and other parts of Europe cast a shadow over the global economy.

Markets went into a tailspin after news that Austria will become the first Western European state to reimpose a full lockdown to tackle a new wave of coronavirus infections and signs that Germany might do the same. The pan-European STOXX 600 index <.STOXX> lost a third of a percent.

“A total lockdown for Germany would be extremely bad news for the economic recovery,” said Ludovic Colin, a senior portfolio manager at Swiss asset manager Vontobel.

“It’s exactly what we saw in July, August of this year in parts of the world where the Delta was big; it (COVID-19) came back and it slows down the recovery again.”

Such worries helped send oil prices down 3%, while investors made a dash for so-called safe assets like the dollar.

Brent crude was last down 2.7% at $79.05 a barrel. U.S. crude was last down 2.99% at $76.65 per barrel.

The dollar rallied 0.4% and looked set to post its fourth straight week of gains.. Spot gold also got a boost, with prices rising 0.19% to $1,862.03 an ounce.

U.S. Treasury yields also tumbled on the resurgent COVID concerns as investors raced to the safe haven. Benchmark 10-year notes last yielded 1.522%, after dropping as low as 1.515%, the lowest since Nov. 10.

BIDEN’S BIG BILL

The U.S. House voted on Friday morning to pass a $1.75 trillion social spending bill, which if made law would enact several of President Joe Biden’s top priorities, including new funds to address climate change. The bill narrowly passed with only Democratic support, and its fate is unclear in the U.S. Senate, where moderate lawmakers have raised concerns about its size and some of its programs.

The “Build Back Better” bill aims to invest millions to expand education, lower healthcare costs and tackle climate change.

(Reporting by Dhara Ranasinghe and Pete Schroeder; Additional reporting by Alun John in Hong Kong and Yoruk Bahceli and Julien Ponthus in London; Editing by Sujata Rao, Toby Chopra and Dan Grebler)



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