Delta coronavirus variant hits global stock markets

Global stock markets lost ground on mounting fears over the spread of the Delta coronavirus variant. Record-breaking US shares riding on the hopes of an economic recovery fell and markets in Europe and Asia joined the slide.

Market experts see the fall as a short-term correction in the global markets, which has been rising for about one year, on concerns over the pandemic, although conditions could change depending on the impact of the Delta variant.

The Kospi on July 9 closed 1.07% down at 3,217.95 after falling below the 3,200 level as lower US stocks the previous day and fears surrounding a fourth wave of the pandemic in Seoul and surrounding areas soured investor sentiment. Foreign investors sold a net 1.3 trillion won ($1.1 billion) in shares on the day, the largest since May, dragging the index lower, although retail investors bought a net 1.8 trillion won as they seized the chance to buy on dips. In the Kospi market, all of the top 10 stocks in market capitalization, except Samsung SDI Co., fell. Consumption, leisure and airlines stocks, which have been supported by hopes of normalization of economic activities, were hit especially hard. Financial shares also skidded as the 10-year US Treasury yield fell to 1.3% per annum and concerns over the Delta variant are expected to force the central bank to delay an interest rate hike. The Kosdaq also slid 0.54%. The won softened to 1,149.1 against the dollar, its  weakest point so far this year, as investors sought safe-haven assets.

Japan stocks also fell as Olympics organizers will ban spectators from the games in Tokyo for the first time ever after the government declared a state of emergency to curb the COVID-19. The Nikkei 225 ended 0.63%, or 120.36 points lower after losing about 700 points earlier. In New York, the S&P 500 and the Nasdaq, which continued to break record highs, declined 0.86% and 0.72% on July 8. The Dow Jones Industrial Average slumped 0.75%. European stocks, which had been supported by high vaccination rates, tumbled on COVID-19 resurgence and inflation worries with the Eurostoxx 50 down 2.13%.

Experts expect a short-term correction as they see no other bearish factors besides the Delta variant.

“Stock markets took a break for a moment on growing concerns that the Delta variant will slow the resumption of economic activity,” said Growth Hill Asset Management Co.’s CEO Kim Tae-hong. “However, it is necessary to manage risk as corrections in some sectors are inevitable.”

Write to Jae-Won Park at wonderful@hankyung.com
Jongwoo Cheon edited this article.