Just when it looks like the markets are shaking themselves free of coronavirus another bout of worry returns to put them on their back,” says AJ Bell investment director Russ Mould.
“The US is seeing a spike in new cases in some states, although whether this reflects a second wave or a continuation of the first wave is open to debate.
“Other countries, such as Germany and China, have seen an increase in infections in some areas after emerging from lockdown.
“At the very least we can probably expect more of these localised flare-ups of the disease, with regional containment measures imposed to deal with them.
“While the economic impact of such measures will be less than shutting down an entire economy, a recovery of this nature is a messier story for investors to digest and this could act as a drag on equities, hence the FTSE 100 stepping back 0.8% today.
“There was limited corporate news to distract from this downbeat macro mood. Though the announcement that National Express chief executive Dean Finch is to take over at Persimmon at the end of 2020 may ultimately be received positively at the FTSE 100 housebuilder.
“For the first 10 years of his tenure he generated a total return for shareholders of 176%, outpacing the FTSE All-Share over the same timeframe.
“It seems fairer to judge him on this period than the last four months when, inevitably, the coronavirus crisis has had a disproportionate impact on the stock, as it has with most of the wider transport sector.
“Numbers out today from Persimmon’s peer Crest Nicholson provide an indication of the sort of challenge he will face in the wake of the pandemic as it guided for a 70% fall in 2020 profit.”