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31 Jul, 2020 17:56

Europe close: Investors fade early bounce as UK postpones easing lockdown

ep imagen de archivo de aviones de british airways
British AirwaysSteve Parsons/PA Wire/dpa - Archivo

Selling in European stocks extended into a second session at the end of the month, after Downing Street postponed easing lockdown restrictions for two weeks and following the release of data showing a record contraction in euro area economic growth during the second quarter.

But for most analysts the latest economic data was already stale and what mattered now was discerning what lay ahead for growth in the backhalf of 2020.

On one side of that debate, which appeared to be gaining traction, following Friday's Eurozone GDP data, Rabobank analysts mused out loud: "even if there is a working vaccine, this does not mean that we can go back to a preCOVID economy.

"As long as the vaccine is not a silver bullet and there is still risk of infection, the economy would have to be permanently adjusted to protect the vulnerable. Additionally, the vulnerable (and risk averse) will protect themselves and consumer behaviour will change accordingly."

It was against that backdrop that, shortly before midday, the UK announced that an easing of lockdown measures that had been due to go into effect at the weekend would be postponed, following recent spikes in Covid-19 cases in some parts of northern England,

The benchmark Stoxx 600 fell 0.89% to 356.33, alongside a 0.54% drop on the Dax to 12,313.36 while the FTSE Mibtel erased its early bounce to end 0.71% lower to 19,091.93.

By sectors on the Stoxx 600, technology issues pared a near 2% advance, on the back of earnings from US peers Amazon and Facebook overnight, to finish 0.72% higher.

Travel and leisure issues meanwhile fell 2.01% in the wake of the UK's announcement on Covid-19 restrictions, although it was Autos&Parts which fared worst, skidding 2.88% lower.

At the individual level, Nokia and Nemetschek AG were among the top gainers on the Stoxx 600, alongside stock in Italian lender UBI SpA. So too was French waste and water group Suez after its latest interim figures.

Euro/dollar retreated 0.64% and was at 1.1771, having breached 1.19 during Asian trading hours.

In quarterly annualised terms, France's gross domestic product shrank by an outsized 12.8% over the three months to June (consensus: -15.0%).

That was alongside a 12.4% drop in Italy (consensus: -15.3%) and an 18.5% decline in Spain (-16%).

All told, Eurostat reported a 12.1% quarter-on-quarter drop in Eurozone GDP for the second quarter (consensus: -12%).

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Important Legal Notice about News Sources

 

Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.