European Shares Flat as Economic Risks and Virus Woes Weigh

European Shares Flat as Economic Risks and Virus Woes Weigh

On Thursday, there was almost no change in European shares, as a disappointing growth forecast for the United Kingdom and the extension of COVID-19 restrictions in Germany brought the focus once again towards the disastrous economic impacts of the coronavirus pandemic. At 0920 GMT, the European STOXX 600 index remained flat, with gains in healthcare and tech stocks offset by the fall in the energies and auto sectors. Last month, European countries were swept by the second wave of coronavirus infections, which prompted France, Germany, and the United Kingdom, to once again impose strict lockdown measures in their respective regions.

This dealt a rather heavy blow to business activities, which were already struggling, as gyms, restaurants and shops had to be shut down. However, the benchmark STOXX 600 index is still on its way to have its best month in November on record. Plus, market participants are also expecting European equities to reach record highs in the next year, after three major pharmaceutical companies had shown promising coronavirus vaccine trial results. Analysts said that the global rally had now come to a halt because even though the results of the vaccine were quite promising, it was difficult to predict when the pandemic would finally be over.

It will take time for it to be manufactured and then distributed globally, so the market outlook remains uncertain for now. As the markets in the United States are closed due to a Thanksgiving holiday, the trading volumes are expected to be on the lower side. On Wednesday, Chancellor Angela Merkel said that the restrictive measures that were imposed earlier this month in Germany would be extended for reining in a second wave of COVID-19 infections, which is sweeping most of Europe. She said that they were to be extended till December 20th at the very least and could be longer as well.

The blue-chip DAX in Germany remained mostly flat, while early gains by the French CAC 40 were also erased to trade a bit higher after a survey indicated that consumer confidence in the country had fallen in November to reach a two-year low. Investors were also keeping an eye out on details regarding post-lockdown restrictions in the United Kingdom. Later in the day, Matt Hancock, the British health secretary will inform the parliament about which of the three tiers will be used for categorizing every English locality after the national lockdown comes to an end in the next week. 

There are three tiers, in which tier 1 is the lowest and tier 3 is the highest. The domestically exposed stocks in the United Kingdom extended their losses after the sell-off had occurred in the previous day. Rishi Sunak, the Finance Minister, had warned that the economy was on course to decline by 11.3% this year and had unveiled plans for borrowing amounts that hadn’t been seen before during the peacetime in Britain. Meanwhile, in company news, there was a 1.3% drop in Amigo Holdings after it reported a slump of 36.5% in revenue in the first-half. 

Leave a Reply

Your email address will not be published. Required fields are marked *