(Bloomberg) — European stocks dropped to a five-month low and U.S. equity futures slumped as rising coronavirus infections and tougher lockdowns added to worries about the economic hit from pandemic.

The Stoxx Europe 600 Index sank more than 2.4% after German Chancellor Angela Merkel proposed closing bars and restaurants for a month to curb the spread of the virus. All 19 industry sectors slid, with auto and real estate shares seeing the steepest declines.

S&P 500 futures held a 1.5% drop even as positive earnings rolled in from two bellwether companies. General Electric Co. jumped in premarket trading after reporting a surprise profit. Airplane maker Boeing Co. also had an earnings beat. Microsoft Corp. slipped after the software company gave a revenue forecast pointing to slower growth.

Haven assets, such as Treasuries and German bunds, advanced. The VIX Index, a measure of U.S. equity volatility, climbed to the highest level since June. Bitcoin rose to levels not seen in almost three years.


chart: VIX measure of implied U.S. equity swings shows price spike for hedging

© Bloomberg VIX measure of implied U.S. equity swings shows price spike for hedging

Markets in the U.S. and Europe have slumped this week as virus cases surge and American lawmakers fail to agree on an economic aid package before the Nov. 3 election. Analysts are also warning about increased volatility in markets ahead of the vote, with some saying that a contested election is still a possibility.

“We’ve been warning investors over the last few days in particular to maybe pare back a little bit of their strong risk position,” Laura Fitzsimmons, JPMorgan Australia’s executive director of macro sales, said on Bloomberg TV. “As you see the odds start to wane a little bit more for Biden, maybe that continues a bit more. We all remember four years ago when markets were very much surprised.”

In Asia, stocks fared better. The MSCI Asia Pacific Index edged lower on Wednesday, and markets in South Korea and Shanghai posted modest gains. In China, indicators tracked by Bloomberg showed the recovery continued to display mixed signals while remaining broadly steady in October.

Elsewhere, oil retreated back below $38 a barrel in New York after an industry report pointed to a bigger-than-expected increase in U.S. crude stockpiles.

These are some events to watch this week:

Bank of Japan and the European Central Bank have monetary policy decisions Thursday, followed by briefings from Governor Kuroda and President Lagarde.The Chinese Communist Party’s Central Committee holds its plenum through Friday, where it’s expected to chart the course for the economy’s development for the next 15 years.Brexit negotiating teams have started intense daily talks, and these are likely to continue as both sides push to finalize a deal by the middle of November.The first reading of U.S. third-quarter GDP Thursday is anticipated to be the strongest on record following a record dive in the prior quarter as many businesses were shuttered by the pandemic.

Here are the main moves in markets:

Stocks

Futures on the S&P 500 Index dipped 1.5% as of 8:23 a.m. New York time.Nasdaq 100 Index futures decreased 1.3%.The Stoxx Europe 600 Index decreased 2.5%.The MSCI Asia Pacific Index fell 0.3%.

Currencies

The Bloomberg Dollar Spot Index increased 0.6%.The British pound declined 0.7% to $1.2948.The Japanese yen strengthened 0.1% to 104.34 per dollar.The Turkish lira weakened 1.2% to 8.2819 per dollar.

Bonds

The yield on 10-year Treasuries fell one basis point to 0.76%.Germany’s 10-year yield dipped two basis points to -0.64%.Britain’s 10-year yield decreased two basis points to 0.215%.New Zealand’s 10-year yield declined four basis points to 0.521%.

Commodities

West Texas Intermediate crude sank 4.6% to $37.75 a barrel.Gold weakened 1.1% to $1,886.18 an ounce.LME aluminum fell 0.1% to $1,820 per metric ton.Iron ore decreased 0.2% to $114.32 per metric ton.

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