Markets tumble again on fears of second wave of coronavirus and warnings of sustained recession

Federal Reserve Chairman Jerome Powell says that the US faces a 'significantly worse' recession than any downturn since World War Two

Stock markets tumbled on Wednesday on fears about a second wave of coronavirus infections and warnings about the severity of the recession.

Federal Reserve Chairman Jerome Powell said that the US faces a “significantly worse” recession than any downturn since World War Two.

Wall Street posted a second straight day of steep declines. The Dow Jones Industrial Average fell 516.81 points, or 2.17 per cent, to 23,247.97. The S&P 500 lost 50.12 points, or 1.75 per cent, to 2,820, and the Nasdaq Composite dropped 139.38 points, or 1.55 per cent, to 8,863.17.

MSCI's gauge of stocks across the globe shed 1.59 per cent following broad losses in Europe and Asia.

However, equity indices are up 25 per cent on their March lows on the promise of further government stimulus programs.

Mr Powell's comments came as parts of the global economy are starting to reopen following lockdowns aimed at curbing the spread of the virus, which has pushed unemployment rates to the highest level since the Great Depression of the 1930s.

Safe-haven assets, such as benchmark 10-year US Treasury notes, have risen as investors positioned for an extended economic downturn.

As national and local governments roll out their strategies for reopening, a lot of uncertainty has been created and this is being reflected in investor sentiment by a period of consolidation.

On Tuesday the US’s leading infectious disease expert Dr Anthony Fauci warned senators that a premature lifting of lockdowns could lead to new outbreaks of the deadly coronavirus.

Furthering souring the mood was proposed legislation by Republican Senator Lindsey Graham that would authorise President Donald Trump to impose sanctions on China if it fails to give a full account of events leading up to the coronavirus outbreak.

With reporting from Reuters