European stock exchanges were operating in a sharp drop on Thursday morning (15). The reduction of hopes with the possibility of a new fiscal stimulus package in the USA before the American election of 3 November and the return of restrictions around Europe in the face of the increase in Covid-19 cases caused generalized risk aversion in the session.
At about 8:15 am, the Stoxx Europe 600 pan-European index fell 2.09%, to 362.88 points, pulled down by the auto sectors, down more than 3%, and banking, which fell more than 2%.
The DAX, a reference on the Frankfurt Stock Exchange, yielded 2.73%; London’s FTSE 100 was down 1.94%; and the CAC 40, in Paris, lost 2.16%. In Milan, the FTSE MIB fell 2.58% and, in Madrid, the Ibex 35 fell 1.73%.
- UK announces ‘high risk’ phase in London and expands restrictions against Covid
European markets are following the tone set in the US overnight, with lower stock futures, as investors continued to weigh the prospects for a deal to combat the effects of coronavirus before the November 3 election.
US Treasury Secretary Steven Mnuchin said on Wednesday that reaching an agreement on the new fiscal package before the election will be difficult, as Democrats and Republicans remain distant on certain issues.
But European stock markets are also under severe pressure with the second wave of coronavirus consolidating on the continent and forcing restrictions to return. The French government declared a state of public health emergency yesterday, when the country saw covid-19 hospitalizations jump above the 9,100 threshold for the first time since June 25.
Four European Countries Record Record of New Covid Cases
New confirmed cases of coronavirus in France reached 22,591 in 24 hours, surpassing the number of the previous day in about 10,000 cases. The state of emergency gives authorities more power to deal with the spread of covid-19 and President Emmanuel Macron announced a curfew in the country from 9:00 pm to 6:00 am from Saturday.
“Now we find ourselves in a scenario where the pandemic is back in the spotlight, while the prospects for a US aid package before the presidential election seem very low. Investors are dismissing stocks for fear that economic activity will slow down due to stricter restrictions in various parts of Europe, ”said David Madden, CMC Markets market analyst.
Among the European stock movements, Roche stands out. The shares fell more than 3% after the company disappointed in the third quarter, although the outlook for the end of 2020 has been maintained.
Airline companies suffer again due to the advance of covid-19 and the return of stronger restrictions. Deutsche Lufthansa’s shares were down more than 6%, those of the International Airlines Group (IAG) were down more than 4% and Air France KLM was down 3%. Hotel operators are also experiencing yet another bitter day in the financial market. Accor’s shares, for example, fall by more than 5%.