Australia

Australian shares are set to fall after sharp losses on Wall Street overnight as covid cases soar and uncertainty over pandemic relief clouds a recovery.

The Australian SPI 200 futures contract was down 65 points, or 0.1 per cent, to 6,085 points at 8.30am Sydney time on Tuesday, suggesting a negative start to trading.

US stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the US economic recovery.

The Dow Jones Industrial Average fell 647.1 points, or 2.28 per cent, to 27,688.47, the S&P 500 lost 64.15 points, or 1.85 per cent, to 3,401.24 and the Nasdaq Composite dropped 189.35 points, or 1.64 per cent, to 11,358.94.

Locally, five million Melburnians will finally be released from coronavirus lockdowns that have confined them to their homes for 111 days, after Daniel Andrews accelerated his cautious easing of restrictions, allowing shops, pubs and restaurants to reopen on Wednesday, The Australian reports.

The S&P/ASX200 benchmark index started higher from a good US lead, but finished down by 11.4 points, or 0.18 per cent, to 6,155.6 on Monday. The All Ordinaries closed lower by 16.4 points, or 0.26 per cent, to 6,357.3.

Gold was up 0.1 per cent at $US1,903.15 an ounce; Brent oil was down 3.1 per cent to $US40.48 a barrel; Iron ore was down 0.8 per cent to $US114.63 a tonne.

Meanwhile, the Australian dollar was buying 71.35 US cents at 8.30am, up from 71.18 US cents at Monday’s close.

Asia

China stocks ended lower on Monday, dragged down by the consumer sector after the country's largest liquor maker Kweichow Moutai posted slower-than-expected growth in quarterly profit.

At the close, the Shanghai Composite index was down 0.82 per cent at 3,251.12, while the blue-chip CSI300 index was down 0.58 per cent.

In Hong Kong, the Hang Seng lifted 132.68 points or 0.54 percent to 24,918.78.

In Tokyo, the Nikkei 225 eased 22.25 points or 0.09 percent to 23,494.34.

Europe

German shares closed at their lowest in nearly four months on Monday as Europe's most valuable tech firm, SAP, experienced its worst trading day in 24 years after cutting its 2020 outlook.

The German DAX fell 3.7 per cent as SAP slumped almost 22 per cent after abandoning medium-term profitability targets and cautioning that its business would take longer than expected to recover from the pandemic hit.

“SAP’s pessimism does not bode well for hopes for the global economic recovery to continue,” said Edward Moya, senior market analyst at OANDA, New York.

“If tech goes, the deteriorating outlook due to virus spread will likely yield massive risk aversion as investors head for the sidelines instead of rotating into cyclicals.”

The wider European tech index slid 7.4 per cent.

SAP’s results came as a blip in the third-quarter earnings season, which has been largely better than feared.

Meanwhile, fresh covid-19-induced restrictions in Italy and Spain to curb a resurgence in cases weighed on the rest of Europe, with the pan-European STOXX 600 index closing at a one-month low, down 1.8 per cent.

Europe on Saturday became the second region after Latin America to surpass 250,000 deaths, according to a Reuters tally.

The euro zone blue-chip index fell nearly 3 per cent, while Europe's travel and leisure sector, worst hit by the movement curbs, was down 3.3 per cent.

Nick Nelson, head of European equity strategy at UBS, said the Swiss bank’s target for STOXX 600 into the year-end is 340 points, about 4.5 per cent below the current level, in part due to the impact of the latest round of restrictions.

Surveys of euro zone purchasing managers last week showed economic activity slipped back into decline in October, heightening expectations for a double-dip recession as a second wave of virus sweeps across the continent.

Globally, risk appetite was sapped by worries over slow progress on a new US stimulus bill and a looming presidential election.

Milan's blue-chip index fell 1.8 per cent even as ratings agency Standard and Poor's upgraded Italy's sovereign outlook to stable from negative.

Oil majors Total and Royal Dutch Shell fell over 2.8 per cent as crude prices slumped more than 3 per cent on demand worries.

Healthcare stocks remained supportive, with AstraZeneca gaining 1.7 per cent after it resumed the US trial of its experimental covid-19 vaccine.

French stocks dipped 1.9 per cent. Turkish leader Tayyip Erdogan asked his compatriots to stop buying French goods on Monday in the latest expression of anger in the Muslim world over images being displayed in France of the Prophet Mohammad, which some Muslims consider blasphemous.

North America

US stocks tumbled on Monday in thin trade, with the S&P 500 posting its biggest daily decline in four weeks, as soaring coronavirus cases and uncertainty about a fiscal relief bill in Washington dimmed the outlook for the US economic recovery.

The US, Russia and France set daily records for coronavirus infections. The number of hospitalised Americans with covid-19 jumped to a two-month high.

Travel-related stocks, vulnerable to covid-19 related curbs, fell sharply. The S&P 1500 airlines index fell about 6 per cent and cruise line operators Carnival Corp and Royal Caribbean Cruises Ltd fell more than that.

“Fears about covid-19 resurgence and the continued failure to reach a fiscal policy package between Republicans and Democrats has investors unnerved,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.

“Those are the two biggest drivers of today’s decline.”

The energy index tracked a more than 3 per cent fall in oil prices. The economically sensitive industrials and financials also posted steep declines among S&P sectors.

The big price moves came as trading volume was substantially less than the daily October average.

“From our clients’ perspective, the uncertainty is causing them to stay on the sidelines. So you’re seeing a lack of buyers, generally speaking,” said King Lip, chief strategist at Baker Avenue Asset Management in San Francisco.

US House of Representatives Speaker Nancy Pelosi spoke with Treasury Secretary Steven Mnuchin about covid-19 relief legislation.

Wall Street’s fear gauge hit its highest in more than seven weeks as uncertainty grew over the 3 November election. Some 60 million Americans have voted in a record-breaking early turnout as Trump and Democratic challenger Joe Biden entered their final week of campaigning.

It is also one of the busiest weeks of the third-quarter earnings season that will see results from mega-cap US tech firms including Apple Inc, Amazon.com Inc, Google-parent Alphabet Inc and Facebook Inc.

The tech sector is among the only three sectors apart from healthcare and consumer staples expected to post an increase in profit from a year earlier.

Of the 139 companies in the S&P 500 that have reported earnings so far, 83.5 per cent have beaten Wall Street expectations, according to Refinitiv data.

The Dow Jones Industrial Average fell 647.1 points, or 2.28 per cent, to 27,688.47, the S&P 500 lost 64.15 points, or 1.85 per cent, to 3,401.24 and the Nasdaq Composite dropped 189.35 points, or 1.64 per cent, to 11,358.94.

Software company Oracle Corp fell after German rival SAP abandoned medium-term profitability targets and warned of a longer-than-expected recovery time from the pandemic hit.

Hasbro Inc tumbled as quarterly adjusted revenue fell due to coronavirus-led delays in production of movies and TV shows.

Companies deemed stay-at-home winners including Amazon.com Inc, Zoom Video Communications Inc and video game companies Activision Blizzard Inc and Take-Two Interactive Software Inc bucked the downtrend and rose.