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Wall Street opens sharply lower as virus fears return

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Stocks are opening sharply lower on Wall Street as investors worried that lockdowns could return as more virus cases emerge. The S&P 500 fell 2.3% in the early going Monday.

The benchmark index is coming off its worst week in almost three months. The losses were widespread, and were led by technology companies and banks. Overseas markets were also lower.

Chinese authorities rushed to contain an outbreak in Beijing in what appeared to be the largest outbreak since China said it had largely stopped the spread of the virus more than two months ago. Crude oil prices fell. Bond yields also fell.

Global shares and U.S. futures sank Monday as a resurgence of coronavirus cases in China and other countries deepened pessimism over prospects for a global economic recovery.

Benchmarks fell in Paris, London, Tokyo and Shanghai after China reported new local infections in Beijing and reimposed precautions to prevent it from spreading.

Stocks are turning wobbly as investors re-evaluate their expectations for economic growth, which many skeptics have been saying were overly optimistic, even as more economies were reopening for business.

Case numbers are still growing in various nations, including emerging economies, and without a vaccine, relaxing lockdowns and reopening travel could bring on further waves of COVID-19 cases.

France’s CAC 40 fell 1.3% to 4,775, while Germany’s DAX dropped 1.3% to 11,783. Britain’s FTSE 100 slid 1.2% to 6,029, led by a 3.5% drop in energy producer BP, which wrote off as much as $17.5 billion, lowered its forecasts for oil and gas prices and said it would drill fewer wells.

U.S. shares were set for declines, with Dow futures dropping 2.3% and S&P 500 futures shedding 2%.

Earlier in Asia, Japan’s benchmark Nikkei 225 dropped 3.5% to finish at 21,530.95. South Korea’s Kospi slipped 4.8% to 2,030.82. Australia’s S&P/ASX 200 shed 2.2% to 5,719.80. Hong Kong’s Hang Seng slid 2.2% to 23,776.95, while the Shanghai Composite edged down 1.0% to 2,890.03.

“Once again, the pandemic has triggered cause for fear and doubt about the road ahead,” Hayaki Narita at Mizuho Bank said in a commentary.

Rising COVID-19 cases in Latin America and parts of Asia, re-emerging “second wave” risks in parts of the U.S., South Korea and China and so-called “cluster” cases in Japan were adding to worries, he said.

Tokyo reported 48 newly confirmed cases on Monday, the highest since the government “emergency” for the virus outbreak was called off last month, according to Kyodo News, citing unidentified sources familiar with the records.

China reported 49 new confirmed coronavirus cases on Monday, 36 of them in Beijing, as the capital re-instituted measures to contain a new outbreak. Authorities were testing tens of thousands of people after dozens of cases were traced to a wholesale market that supplies much of the city’s meat and vegetables.

India’s public health authorities reported more than 11,000 new cases.

Rolling waves of outbreaks, if left unchecked, could result in more shutdowns to fight the pandemic, or at the very least will undermine consumer and business spending, hindering a global recovery. The concerns overshadowed that fact that more shops ad restaurants were resuming business in countries like Britain and France and tourism reopened Greece.

“If globally, we are still in wave 1, then it is possible that without a vaccine, the big wave is still lying out there somewhere waiting to hit,” said Robert Carnell, regional head of research Asia-Pacific at ING.

China’s industrial production accelerated in May, suggesting the world’s second-largest economy is gradually recovering from earlier shutdowns to fight the coronavirus. Factory output rose 4.4% over a year earlier, up 0.5 percentage points from April’s rate.

But analysts at RaboResearch said in a commentary the data had “mostly disappointed.”

“In short, even with a ‘build it and they will come’ attitude, and even with the virus ‘having been beaten,’ it still looks like China’s Q2 GDP will be negative,” it said.

Benchmark U.S. crude oil lost 82 cents to $35.44 a barrel in electronic trading on the New York Mercantile Exchange. It fell 8 cents to settle at $36.26 a barrel Friday. Brent crude oil, the international standard, fell 50 cents to $38.23 a barrel.

The dollar inched up to 107.33 Japanese yen from 107.37 yen. The euro was flat at $1.1254.

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