Oil prices slip 3% as Europe widens lockdowns

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SINGAPORE (Reuters) – Oil prices fell more than 3% on Monday on worries a swathe of coronavirus lockdowns across Europe will weaken fuel demand, while traders braced for turbulence during the U.S. presidential election week.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.5% to 573.04, as China’s Caixin/Markit Manufacturing Purchasing Managers’ Index offered hope the region’s success in containing the coronavirus could spare it the economic pain being inflicted on Europe and the United States.

All major indexes except New Zealand were up on Monday.

Australian shares .AXJO rose 0.4%.

Chinese shares were higher with the blue-chip CSI300 .CSI300 rising 0.8% with the country’s vast industrial sector steadily returning to levels seen before the COVID-19 pandemic paralysed huge swathes of the economy.

Japan’s Nikkei .N225 jumped 1.5%.

E-Mini futures for the S&P 500 ESc1 added 0.1%, with investor focus turning to the U.S. Presidential elections on Tuesday.

The global outlook is dimming as many Western countries battle still rising COVID-19 infections and go back into virus lockdowns.

Global coronavirus cases surpassed 500,000 last week with Europe crossing the bleak milestone of 10 million total infections. The United Kingdom is grappling with more than 20,000 new cases a day while a record surge of U.S. cases is killing up to 1,000 people a day.

Fresh coronavirus-induced lockdowns have raised concerns over the outlook for fuel consumption, sending Brent crude LCOC1 to a low of $35.74 per barrel, a level not seen since late May. U.S. crude went as low as $33.64.

Underwhelming outlooks and results from some of Wall Street’s largest companies last week, including Apple AAPL.O and Facebook FB.O, further soured the mood and dragged U.S. stocks lower last week.

“Markets are looking ahead of Q4 and early 2021 where the growth outlook looks clouded given the move to stricter lockdowns in Europe,” Perpetual analysts wrote in a note.

They said a -1% hit to European growth would send global gross domestic product down by 0.5% over the subsequent 12 months.

“The key question here is how long are the lockdowns needed to get the virus under control.”

Ahead of the last campaign weekend, Republican President Donald Trump trails Democratic challenger Joe Biden in national opinion polls partly because of widespread disapproval of Trump’s handling of the coronavirus.

Opinion polls in the most competitive states that will decide the election have shown a closer race, still favouring Biden. 

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