People wearing face masks walk past an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo…
People wearing face masks walk past an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo, July 22, 2020.

The growing spike in new infections from the coronavirus pandemic, coupled with a sudden new chapter in the worsening relationship between the United States and China, sent European markets into freefall Wednesday.

The FTSE index in London is down 0.8% at the midday mark.  Paris’s CAC-40 index has dropped 1.1%, and the DAX index in Frankfurt is down 0.4%. 

Investors were apparently shaken by the U.S. State Department’s unexpected order for China to close its consulate in (the southwestern U.S. city of) Houston, Texas. Relations between the world’s two largest economies have steadily worsened in recent months over a number of issues, including trade, technology and the new national security law imposed on Hong Kong. 

Asian markets had finished in mixed territory earlier Wednesday.  Japan’s Nikkei index lost 0.5%.  Hong Kong’s Hang Seng index lost a staggering 2.2% at its closing bell, while the Composite index in Shanghai gained 0.3%

Australia’s S&P/ASX index closed down 1.2% after news reports about a jump in new coronavirus infections in the southern state of Victoria, home to Australia’s second-largest city, Melbourne.  Elsewhere, the KOSPI index in South Korea was down, but essentially unchanged percentage-wise, and Taiwan’s TSEC index is up 0.6%  Mumbai’s Sensex index finished its trading session down 0.1%.

The political gridlock in the U.S. over a new financial aid package for millions of Americans left unemployed due to the pandemic has also cast a pall over the markets.  

Oil markets are also dropping:  U.S crude is selling at $41.36 per barrel, down 1.3%, while Brent crude is trading at $43.82 per barrel, down 1.1%.  

The Dow Jones and S&P 500 are trending downward in futures trading while the NASDAQ is slightly higher just ahead of Wednesday’s opening bell on Wall Street.