Eurozone stocks slide as Covid overshadows upbeat data
The eurozone’s main stock markets fell Tuesday, as the spreading Covid crisis took the shine off upbeat survey data.
Meanwhile oil prices jumped by 2 percent despite the US releasing 50 million barrels of crude from its strategic reserves to blunt the commodity’s rising prices.
Frankfurt fell 1.1 percent and Paris shed 0.9 percent.
Europe is battling an upsurge in the pandemic that saw Austria return to a partial lockdown on Monday.
Belgium and the Netherlands are still reeling from recent violent protests against new anti-Covid measures.
Germany has warned its curbs — including barring the unvaccinated from certain public spaces — are not enough.
– ‘Investors in lockdown mode’ –
“It would appear European investors are (also) in lockdown mode,” Craig Erlam, analyst at OANDA trading group, told AFP.
Austria’s lockdown “was a shock to the system but Germany — should it follow — would be a hammer blow to the recovery.
“Thankfully, a number of other countries have a far less severe situation — but as we have seen, that can quickly change at this time of year,” Erlam added.
Nevertheless, eurozone economic recovery is again gaining pace in November, according to the IHS Markit purchasing managers’ index (PMI), which measures corporate confidence.
Yet the survey also highlighted increasing inflationary pressures, with prices and wages rising more steeply.
Britain’s PMI showed a modest slowdown on rising energy and wage bills.
Wall Street was mixed in midday trading as traders eyed a speech by President Joe Biden later in the afternoon where he may announce new steps to fight US inflation.
Earlier Biden announced he had ordered the release of 50 million barrels of oil from the US strategic reserves in a coordinated attempt with other countries to tamp down soaring fuel prices.
Oil prices, which had fallen on speculation ahead of the announcement, rebounded.
The rise in prices was due to traders covering positions “amidst an expectation that OPEC+ might delay or reduce their December output hike in response,” CMC Markets UK Chief Market Analyst Michael Hewson said.
“While this is probably not the response the Biden administration was expecting, it was also entirely predictable given that it was so widely telegraphed, and it’s not something that the US can repeat,” he added.
– Turkey’s ‘economic war’ –
In foreign exchange, the dollar mostly extended gains as investors bet on quicker Federal Reserve monetary tightening after boss Jerome Powell was nominated for a second term.
The greenback topped 115 yen in Asian trades for the first time since 2017.
The euro dropped as low as $1.1226, last seen in July 2020, before bouncing back.
And the Turkish lira plunged to record lows after President Recep Tayyip Erdogan stuck to his support for interest rate cuts, warning his country was in a “war of economic independence”.
Turkey’s currency fell 15 percent as the central bank cut its main interest rate by a percentage point to 15 percent, although the annual inflation rate has reached nearly 20 percent.
The lira has lost more than 40 percent of its value against the dollar since the start of the year.
– Key figures around 1630 GMT –
New York – Dow: UP 0.2 percent at 35,676.52
EURO STOXX 50: DOWN 1.3 percent at 4,283.82
London – FTSE 100: UP 0.2 percent at 7,266.69 (close)
Frankfurt – DAX: DOWN 1.1 percent at 15,937.00 (close)
Paris – CAC 40: DOWN 0.9 percent at 7,044.62 (close)
Hong Kong – Hang Seng Index: DOWN 1.2 percent at 24,651.58 (close)
Shanghai – Composite: UP 0.2 percent at 3,589.09 (close)
Tokyo – Nikkei 225: Closed for a holiday
Euro/dollar: UP at $1.1268 from $1.1237 at 2200 GMT
Euro/pound: UP at 84.23 pence from 83.87 pence
Pound/dollar: DOWN at $1.3377 from $1.3397
Dollar/yen: UP at 114.98 yen from 114.88 yen
Brent North Sea crude: UP 2.6 percent at $81.79 per barrel
West Texas Intermediate: UP 2.0 percent at $78.26 per barrel