Iran reports 8 new coronavirus deaths, raising toll to 34 Mexico confirms first coronavirus cases in two men returned from Italy Congo military intelligence chief dies of heart attack, wife says Trump administration defends coronavirus response from rising criticism Coronavirus outbreak 'getting bigger', WHO says Paraguay dengue fever death toll rises to 34 At least 23 guests leave Canary Islands hotel locked down over coronavirus

European stock markets settle below record highs

Reuters /London

Friday، 14 February 2020 11:43 PM

A handful of negative company updates from Britain and France knocked European shares off record highs hit earlier in the session yesterday, while investors grappled with the impact of the coronavirus outbreak on global growth.
The pan-European STOXX 600 closed down 0.1% after notching up a new high of 432.26 points in early afternoon trading.
London’s FTSE 100 underperformed its European peers with a 0.6% drop, as drugmaker AstraZeneca forecast a possible slowdown in revenue growth this year, assuming a hit from China’s coronavirus epidemic.
France’s CAC 40 fell 0.4% as Barclays downgraded several consumer stocks, saying the outbreak will have major impact on Chinese consumption.
Cosmetics group L’Oreal as well as spirits makers Remy Cointreau SA and Pernod Ricard fell between 0.5% and 1.2% after the rating cut.
“The weekend provides plenty of scope for unpleasant surprises, hence the cautious attitude displayed by risk assets on most Fridays in the year so far,” Chris Beauchamp, chief market analyst at IG, wrote in a client note.
“But it has been yet another week where downside has failed to materialise in any real fashion, leaving investors with nothing to do but keep buying into the rally.”
Despite the uncertainties, the main STOXX 600 recorded its second consecutive weekly gain as investors clung to hopes that the damage to the global economy from China’s coronavirus outbreak will be short-lived.
The World Health Organisation said a large jump in new coronavirus cases seen on Thursday was due to a change in classification methods, and did not necessarily reflect the “tip of an iceberg” of a wider epidemic.
That helped investors to take a batch of downbeat data in stride.
Figures showed eurozone economic growth slowed as expected in the fourth quarter, but employment growth picked up more than expected.
Other data showed the German economy stagnated in the same period due to weaker private consumption and state spending, raising the risk of a recession in an economy hit by weak manufacturing activity.
German stocks ended flat, but recorded a weekly gain of 1.7%.
Real estate and utilities were the best performing European sectors for the day, rising about 1.5% each.
Utilities were boosted by France’s Electricite de France SA, which topped the STOXX 600 after its annual core earnings beat expectations.
Meanwhile, French carmaker Renault SA fell 0.9% after posting its first annual loss in 10 years.
German payments company Wirecard dropped 3.5% even as it reported strong quarterly results, in-line with analyst expectations.
However, there was no update on an outside audit to address Financial Times allegations of fraud and false accounting that have dogged the Munich-based company.
Wirecard has said the allegations are unfounded.
Royal Bank of Scotland’s slumped 6.8% after flagging a new strategy to cut back its investment bank and rename the company.
UK’s exporter-heavy index finished the week with a 0.8% drop, hit by a pound that has firmed on expectations the new British finance minister would unveil a more expansionary budget next month.
Meanwhile, sterling held to its recent jump yesterday as traders stuck with the view that the new British finance minister would unveil a more expansionary budget next month.
With growth weak in Britain, many economists and investors want to see the UK expand fiscal spending to help weather the impact of Britain’s departure from the European Union at the end of last month.
On Thursday, Prime Minister Boris Johnson forced the resignation of finance minister Sajid Javid after the latter refused to sack his advisers.
He was swiftly replaced by loyalist Rishi Sunak, which investors interpreted as a move to tighten Johnson’s control over the Treasury and one that would pave the way for more public spending at a March budget. Javid was regarded as a fiscal hawk.
“Sterling may continue to hold the line against the dollar at close to $1.30 and stay firm against the weaker euro after the UK government reshuffle, which may lead to greater fiscal stimulus in next month’s budget,” analysts at UniCredit said in a note.
Expectations for a rate cut from the Bank of England before the end of 2021 have all but evaporated – money markets are now pricing in a full 25 basis point cut not before December 2021.
The pound rose marginally on Friday to $1.3048, retaining most of its gains from Thursday’s move. It had traded below $1.30 before news broke of Sunak’s appointment.
Against the euro the pound rose 0.1% to 82.995, close to a two-month high.
Attention next week will turn back to the health of the UK economy, with employment, inflation and retails sales numbers all due.

Add Comment

There are no comments.