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Fears of another Covid-19 wave send stocks tumbling

Developing a vaccine for Covid-19 is complex enough, but so will be manufacturing and distributing billions of doses the minute it gets regulatory approval.  CNN's Anna Stewart reports.

Posted: Sep 20, 2020 9:25 AM
Updated: Sep 21, 2020 5:45 AM


Concerns that a second wave of coronavirus infections could rock the nascent economic recovery are sending stocks sharply lower.

What's happening: Germany's DAX and France's CAC 40 dropped 3.3% in early trading, while the FTSE 100 in London fell 3.4%. US stock futures are also sharply lower.

The market reaction comes as cases surge in both Europe and parts of the United States heading into the fall and winter, when the spread of the virus could accelerate as people spend more time inside. Hospitals will also face new constraints as the seasonal flu resurfaces.

Should cases continue to rapidly climb, government officials could be forced to adopt a wave of new restrictions.

So far, countries like the United Kingdom have largely relied on targeted measures to try to keep the economic recovery on track. But pressure is building for a stronger national response, which would have big consequences for the economy.

The UK has 'in a bad sense, recently turned a corner,' UK chief medical advisor Chris Whitty said Monday at a briefing.

In a note to clients Friday, Deutsche Bank economist Sanjay Raja warned that new rules will have an economic impact.

'Stricter social restrictions will weigh on the UK's recovery,' he said. 'This is one reason we expect the recent GDP surge to be short-lived.'

Watch this space: It's not just Europe. In 31 US states, the number of new Covid-19 cases has increased by at least 10% this past week compared to the previous week, according to data Sunday from Johns Hopkins University.

'Investors are becoming increasingly worried about the momentum in the economic recovery given the resurgent numbers of global Covid-19 cases,' said Hussein Sayed, chief market strategist at FXTM.

Bright spot: New Zealand has dropped social distancing restrictions everywhere except its biggest city, Auckland, after reporting no new cases on Sunday. But many of the world's biggest economies appear to be heading in the wrong direction.

Watch TikTok, WeChat and HSBC

TikTok narrowly avoided a ban on US downloads this weekend after President Donald Trump blessed a deal that would give Oracle and Walmart a stake in the social media app, which is owned by China's ByteDance.

But as the week kicks off, it's clear the saga is far from over.

What's happening: Oracle and Walmart say that the new company, TikTok Global, will be majority owned by American investors — but ByteDance has released a statement reiterating that it will retain an 80% stake.

Trump has also complicated matters by alluding to a mysterious $5 billion education fund he claims will be created because of the deal. ByteDance, meanwhile, said it's unaware of this arrangement.

'Some news media reported that TikTok will set up a $5 billion education fund in the United States,' ByteDance said in a statement posted Sunday on Chinese social media. 'We would like to clarify that it was also our first time hearing about the news.'

What it means: The Trump administration delayed the TikTok ban by just one week —which means time is again running out to sort through the agreement and secure approval from all the necessary parties. Notably, it's not clear that the arrangement has backing from Beijing.

That's not all: TikTok isn't the only moving part at a crucial moment for the US-China relationship and the companies forced to navigate rising tensions between the world's two biggest economies.

A separate download ban on messaging app WeChat, which is owned by China's Tencent, was temporarily blocked by a federal judge Sunday night, hours before it was due to take effect. The US Commerce Department did not immediately respond to a request for comment.

Meanwhile, shares of HSBC fell nearly 6% to a multi-decade low in London on Monday after The Global Times, a Chinese state-backed tabloid, suggested that the bank could be added to a list of 'unreliable' entities targeting foreign companies. (Over the weekend, a BuzzFeed report also accused HSBC and other major lenders of failing to stop criminals from moving dirty money around the world. The company said it has taken major steps to fight financial crime since 2012.)

Nikola founder steps down in battle with short seller

A short seller's claims of fraud at Nikola continue to rock the electric truck startup. The company has been a recent favorite among retail investors and scored a big investment from GM earlier this month.

This just in: Founder Trevor Milton stepped down as executive chairman on Sunday after Hindenburg Research, which makes money by betting against companies, accused Nikola of misleading investors and overstating the value of a business deal, my CNN Business colleague Charles Riley reports.

Milton has also resigned from the company's board, Nikola said in a statement. The company has previously denied the allegations and threatened legal action against the research company that made them.

'The focus should be on the company and its world-changing mission, not me,' Milton said in a statement posted on Twitter. 'I intend to defend myself against false accusations leveled against me by outside detractors.'

Stephen Girsky, a former vice chairman of General Motors and current Nikola board member, will take over as chairman.

Investor insight: Nikola's stock skyrocketed after the startup joined the Nasdaq through a reverse merger with a so-called 'blank check' acquisition company in June, but it's come under pressure since Hindenburg Research published its report. Shares dropped 30% in premarket trading on Monday.

Up next

The Chicago Fed National Activity Index, which tracks US economic activity, posts at 8:30 a.m. ET.

Coming tomorrow: Nike and Stitch Fix report earnings.

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 886939

Reported Deaths: 17167
CountyConfirmedDeaths
Los Angeles2904866944
Riverside650561275
San Bernardino609451065
Orange576351423
San Diego53263863
Kern33551413
Fresno30220430
Sacramento24811474
Santa Clara23591382
Alameda22932435
San Joaquin21436484
Contra Costa18273238
Stanislaus17403394
Tulare17317279
Ventura13930160
Imperial12610336
San Francisco11969137
Monterey1115884
San Mateo10918157
Santa Barbara9671119
Merced9386153
Sonoma9016134
Kings817383
Solano720574
Marin7036127
Madera492873
San Luis Obispo408032
Placer402355
Yolo309958
Butte302651
Santa Cruz272524
Napa190814
Sutter182112
Shasta178629
San Benito141114
El Dorado13024
Yuba128010
Mendocino111121
Tehama7938
Lassen7611
Lake67815
Glenn6473
Nevada5988
Humboldt5609
Colusa5486
Calaveras33917
Amador31316
Tuolumne2574
Inyo21815
Siskiyou1860
Del Norte1751
Mono1752
Mariposa782
Plumas610
Modoc270
Trinity250
Sierra60
Alpine30
Unassigned00
Chico
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Oroville
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Paradise
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Chester
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Red Bluff
Clear
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Willows
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Very strong winds and dry conditions are driving critical fire danger today. A Red Flag Warning for high fire danger, a Wind Advisory, and a Freeze Warning are all in effect for the start of your Thursday.
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