Markets crash back down to Earth amid fears of a coronavirus ‘second wave’

Good morning, Bull Sheeters. This is Fortune finance reporter Rey Mashayekhi, filling in for Bernhard Warner.

Thursday was a day of reckoning for bulls who have ridden the market’s extraordinary rally—one apparently disconnected from the harsh economic realities gripping much of the world right now. Here’s how things stand as we near the end of the week.

Markets update

Asia

  • After posting sharp losses early Friday, Tokyo’s Nikkei (-0.75%) and Hong Kong’s Hang Seng (-0.7%) rebounded to close slightly down. On mainland China, the major indices in Shanghai (-0.04%) and Shenzhen (+0.07%) also rallied to par. In South Korea, the KOSPI (-2%) saw a sharper decline.
  • There’s more U.S.-China trade tumult in the news. China’s WTO delegation denounced a U.S. executive order banning American firms from using telecom equipment from Chinese companies said to pose a national security risk. In D.C., senators introduced a bipartisan bill that would increase oversight and penalties on foreign companies for intellectual property theft. Meanwhile, Beijing’s envoy to Ottawa labeled the U.S. a “troublemaker” for interfering in Chinese-Canadian relations.
  • Singapore’s prominence as a derivatives trading hub may take a hit after it lost an MSCI index licensing deal to Hong Kong.
  • Count retail traders in South Korea among those who have proven desperate to get in on the market’s rally.

Europe

  • The European bourses took sizable losses across the board Thursday. London’s FTSE (-4%), Frankfurt’s DAX (-4.5%), the CAC 40 in Paris (-4.7%), and the pan-European STOXX 600 (-4.1%) all fell.
  • Amazon is reportedly facing antitrust charges by European regulators over its treatment of third-party sellers.
  • Consumer goods giant Unilever is ditching its long-held, dual British-Dutch legal status in favor of establishing a single entity in Britain.
  • Lloyds Bank is being fined £64 million ($81 million) by British regulators for mistreating mortgage customers.

U.S.

  • Wall Street had its worst day since March as the great coronavirus rally of 2020 came to a screeching halt. The Dow (-6.9%) lost more than 1,800 points, while the S&P 500 (-5.9%) also slid and the Nasdaq (-5.3%) fell back below 10,000 points. But futures were up on Friday morning, indicating a possible rebound in the cards.
  • With coronavirus cases increasing in many parts of the U.S., investors appear spooked that the economic recovery from the pandemic will be longer, slower, and more painful than many hoped. Not even a decline in unemployment claims could lift the mood of the markets.
  • I recapped Hertz’s incredible post-bankruptcy stock bounce yesterday. Now, the beleaguered car rental firm is looking to issue more shares potentially worth up to $1 billion.
  • DoorDash is reportedly close to securing new funding from T. Rowe Price, Fidelity, and other investors that would value the food delivery firm at more than $15 billion. DoorDash is said to still be eyeing an IPO this year.

Elsewhere

  • Spot gold fell slightly, while gold futures climbed.
  • The dollar notched upward.
  • Crude oil continued its slump, with Brent settling at over $37/barrel.

Escaping the carnage

It was a brutal day virtually across the board for publicly listed companies on Wall Street. All 11 industry sectors tracked by the S&P 500 registered sizable declines, and even resilient tech behemoths couldn’t escape losses.

The five most valuable tech companies all fell sharply on the day, shedding roughly $270 billion in value combined. Microsoft led the way (-5.4%), followed by Facebook (-5.2%), Apple (-4.8%), Alphabet (-4.3%), and Amazon (-3.4%).

Did anyone manage to escape the carnage? Only a select few. In fact, only one S&P 500 company saw its shares climb on the day: supermarket retailer Kroger, which managed to just tick upward (+0.4%). And over on the Nasdaq, Zoom Video Communications—whose platform has become seemingly ubiquitous in our new teleworking reality—was one of the few winners (+0.5%).

Meanwhile, the rest were left to patch themselves up and hope that bullish futures translate to a better Friday on the markets.

***

That’s all for me this week; you’ll be back in Bernhard’s hands on Monday. Stay safe, and have a wonderful weekend.

Rey Mashayekhi
@ReyM12
[email protected]

As always, you can write to [email protected] or reply to this email with suggestions and feedback.

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