European stocks dropped on Friday as uncertainty weighed on the travel industry and stalling negotiations for US fiscal stimulus suppressed hopes for a quick economic recovery.
The continent-wide Europe Stoxx 600 fell 1.7 per cent in morning trading as selling accelerated after the open. London’s FTSE 100 and the CAC 40 in Paris dropped 2.2 per cent, while the fall for Frankfurt’s Xetra Dax was milder.
Travel companies were some of Europe’s biggest losers following the UK’s decision late on Thursday to make returning travellers from France and the Netherlands quarantine for 14 days. Paris is expected to follow suit with reciprocal requirements. Shares in easyJet and British Airways parent International Airlines Group fell about 6 per cent, while those in Ryanair and Tui dropped roughly 5 per cent.
Strategists said the UK decision added to concerns that the recent rise in coronavirus cases across Europe will snuff out the still-fragile economic recovery amid fears of a slowing rebound in other major global economies.
“When you look at Europe, the risk of a second wave is increasing again,” said Elizabeth Geoghegan, fixed income portfolio manager at Mediolanum.
S&P 500 futures reversed early gains to be down 0.4 per cent, as the US benchmark equities index hovers close to its all-time intraday high.
US Treasuries steadied on Friday after a sell-off this week, which sent yields higher, following a record $26bn auction of 30-year bonds that saw depressed demand. The yield on the US-10 year Treasury note fell 0.02 percentage points on Friday to 0.6963 per cent.
US stocks ended slightly lower on Thursday after data showed that the number of people who filed for unemployment benefits over the previous week fell below 1m for the first time since the pandemic began. Economists had forecast jobless claims of about 1.1m.
The positive figures dented traders’ expectations that the White House and Congress would quickly agree on a new support package for as much as $2tn for the millions of Americans left unemployed by Covid-19.
Nancy Pelosi, the Democratic Speaker of the House of Representatives, doused optimism on a breakthrough late on Thursday when she said that no progress had been made towards a deal and no meeting with Republicans to thrash out a deal had been scheduled.
ANZ analysts highlighted the improving unemployment figures and positive inflation data this week as indications of an economic recovery but emphasised the need for more government support. “While this points to some improvement in the economic recovery, the path ahead will be influenced heavily by what comes next on the fiscal stimulus side,” they said.
Chinese stocks were the best performers in Asia-Pacific, despite economic data for July that came in lower than analysts’ expectations, which could raise concerns over the velocity of the country’s recovery from Covid-19. Mainland China’s CSI 300 index added 1.2 per cent but other bourses in the region were unchanged or lower.
China’s retail sales dropped 1.1 per cent year on year, the seventh straight month of declines, versus predictions for a 0.1 per cent rise. Fixed asset investment, which includes spending on infrastructure and property, fell 1.6 per cent in the first seven months of the year, defying economists’ predictions for a rebound.
Yu Song, chief China economist at Goldman Sachs, said the latest flurry of data raised the prospect that Beijing would hold its position on stimulus measures. “With activity growth and unemployment largely steady . . . inflation rising and the virus increasingly under control without full-scale lockdown, policymakers likely see a lack of strong rationale to loosen their policy stance incrementally for now,” he said.
Investors will turn their attention to a meeting between US and Chinese officials over the weekend to review the progress made on their “phase one” trade agreement.
https://news.google.com/__i/rss/rd/articles/CBMiP2h0dHBzOi8vd3d3LmZ0LmNvbS9jb250ZW50LzQ5ODI0NjI3LTI0ZGUtNGRhNi05YTNlLWQ4ODhlZDJiY2ZkOdIBP2h0dHBzOi8vYW1wLmZ0LmNvbS9jb250ZW50LzQ5ODI0NjI3LTI0ZGUtNGRhNi05YTNlLWQ4ODhlZDJiY2ZkOQ?oc=5
2020-08-14 10:05:00Z
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