Economists trim forecasts and investors feel jitters over Delta variant

Economists trim forecasts and investors feel jitters over Delta variant

Sign up to myFT Daily Digest to be the first to know about Equities news.

Investors in the $51tn US stock market are coming around to the view that the spread of the Delta coronavirus variant will dampen the global economic recovery, threatening a record-breaking rally.

The benchmark S&P 500 index on Wednesday fell by the most in a month, while it was moving modestly upwards on Thursday. Major stock indices in Europe and Asia closed lower on Thursday.

Signs of a slackening recovery have been accumulating in recent weeks as the coronavirus spreads again, with surveys pointing to weaker growth in business activity in several regions of the US as well as deteriorating consumer confidence trends. Data on Tuesday added to the worries confronting investors, as retail sales in the country dropped more quickly than expected. Weak economic data from China has only added to concerns.

Coupled with signals that Federal Reserve policymakers are readying to pare back emergency stimulus measures in the months ahead, money managers voiced doubt over stocks’ ability to rise beyond already lofty levels. Trading in options markets underlined the cautious view by investors, as many traders on Thursday turned to derivatives that would protect against equities falling in