Much of Australia is back in a pandemic lockdown. Tokyo opened the Olympics on Friday under a state of emergency. The Netherlands has had to reimpose restrictions on cafés, bars and nightlife. New travel warnings have hit Spain’s hopes of a revival in tourism, and Italians will soon have to show a health pass if they want to see a film or swim, after prime minister Mario Draghi followed France’s lead and took steps to prod people into seeking vaccination.
The unwelcome return of restrictions has planted a new fear in the minds of investors: that the rapid spread of the coronavirus Delta variant could bring the global recovery to a juddering halt.
Just 10 days ago, markets were fixated on the risks of overheating economies stoking a surge in inflation — piling pressure on policymakers to consider an early withdrawal of pandemic-era stimulus measures. This week began with a sharp sell-off in global equities as fears grew over the spread of the Delta variant. By midweek, stock prices had bounced back — but US Treasury yields remained at rock bottom levels, suggesting creeping doubts about the strength of the global recovery.