Global markets fall amid pessimism over soaring Covid-19 cases | Stock markets

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Stock markets have fallen across the world amid deepening pessimism over a surge in Covid-19 infections.

Most markets in Europe dropped by more than 2% after a slide in Asia overnight that came when Indonesia reported an increase in cases and some athletes tested positive at Tokyo’s Olympic village, with the Games due to open on Friday.

In the UK the FTSE 100 index of leading shares fell 1.9% to 6,868, while the German Dax was down 2.11% and the Paris Cac tumbled 2.15%.

In the US, the futures market for the Dow Jones industrial average dropped 0.8% to 34,283.5.

Analysts said reports of outbreaks across south-east Asia and hotspots such as the UK had spooked investors. Many had taken their money out of shares and sought safe haven assets such as government bonds, pushing some yields – the effective interest rate on a bond – to lows not seen since February.

The 10-year US Treasury yield hit a five-month low of 1.26% and the German 10-year yield fell to minus 0.37%, the lowest since early March.

Brent crude, the international oil benchmark, dropped 2.8% to $71.50 (£52.21) a barrel as concerns about the likely path of global economic growth followed earlier falls caused by Opec, the cartel of oil-producing countries, and its allies reaching a deal to raise production to counter increasing prices.

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Lavanya Venkateswaran, an analyst at Mizuho Bank in Singapore, said the 10-strong Asean economic bloc covering Thailand, Singapore and the Philippines was on the brink of a resurgence of the virus after recent localised outbreaks.

“The more transmissible Delta variant is delaying the recovery for the Asean economies and pushing them further into the doldrums,” she said.

Joshua Mahony, a senior market analyst at IG in London, said the rise in infections in the UK was a setback to travel firms and hospitality businesses, with their shares being slashed in value.

“While restrictions have been eased, the fact that Covid is so rife within the country does breed the kind of caution that could inhibit the exact economic activity encouraged by the government,” he said.

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