European stock markets ended the week in the red, with London’s FTSE slipping 0.2% yesterday. On the other side of the Atlantic, Wall Street followed up a record close with a more cautious showing yesterday, amid protracted political uncertainty over a new spending package.
In London, the FTSE 100 closed down 0.2% to 6,001.89 points; Frankfurt DAX 30 ended down 0.5% to 12,764.80 points; Paris CAC 40 closed down 0.3% to 4,896.33 points and EURO STOXX 50 closed down 0.4% to 3,258.75 points yesterday.
While vast central bank support has helped fan a surge in equities globally, economic data showed that 1.1mn Americans made new claims for unemployment benefits last week, reinforcing concerns about the world’s biggest economy.
However, observers said the reading could give warring lawmakers in Washington the kick-start they need to agree a new rescue package, having failed to reach a consensus after two weeks.
The euro, which hit two-year highs against the dollar this week, fell yesterday as data showed eurozone economic activity slowing in August against a backdrop of rising coronavirus cases.
The pound also fell against the dollar as the EU and Britain traded blame for the lack of progress after the latest round of post-Brexit trade talks, with Brussels warning that a deal looked unlikely.
Sterling is being punished “by Brexit talks which seem to be going nowhere,” said Neil Wilson, analyst at Markets.com.
“The two sides are still far from reaching agreement on key terms” of their post-Brexit relationship.
In the eurozone, IHS Markit’s closely-watched PMI index fell to 51.6 points from 54.9 points in July, although that was still above the key level of 50 points that indicates growth.
“The euro’s rally has come to a halt this week on growing concerns that coronavirus is coming back strongly in parts of Europe and will hurt the economic recovery,” said Fawad Razaqzada, market analyst with ThinkMarkets.
“In fact, economic activity has already slowed down according to the latest Purchasing Managers’ Indices from Germany and especially France, where Covid-19 cases have risen sharply since July.”
Britain and the European Union made scant progress towards a deal on future ties in talks this week, and their chief negotiators blamed each other for the stalemate.
Concerns over a hard Brexit bought in a new layer of anxiety for markets already reeling from the impact of the coronavirus.
British stocks have underperformed several of their global peers this year, with doubts over a recovery intensifying after the country’s economy contracted by a record 20% in the second quarter.
“It feels like the market is gradually coming to the realisation that the world is going to have to live with Covid-19 for longer as countries which have emerged from lockdown experience localised flare-ups and a general increase in infections,” Russ Mould, investment director at AJ Bell wrote in a note.
Consumer discretionary stocks were among the few gainers for the day after data showed British retail sales surged past their pre-coronavirus level last month, although concerns persisted over debt levels in the country.
HG Capital rose 8.8% after announcing further investment in software firms Visma and Sovos.
Oil and gas heavyweight BP PLC was one of the worst weekly performers on the FTSE 100, pressured by weakness in oil prices through the week.
There is some optimism nevertheless that a Covid-19 vaccine can be found.
Pfizer and BioNTech SE said a vaccine they are working on could be up for regulatory review by October and, if all goes well, the jab could be ready to roll out as soon as November.
While massive financial support from central banks and governments has been crucial to helping economies, a vaccine for a disease that has killed already nearly 800,000 people and infected more than 22mn is seen as paramount.
The vaccine news “has raised some expectation...that life around the world could return to normal sooner than expected”, said AxiCorp’s Stephen Innes.
“This is not only good for market concerns, this is a world desperately anxious for a cure to put an end to the most severe global recession since the 1930s,” Innes said.
“From a stock market concern, it’s great for growth assets as planes will fly, the oil will flow, and laggard industries will emerge from the Covid-19 fog and their stocks will soar.”
from Gulf Times https://ift.tt/3j27CyR
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