Sat, Jan 16, 2021 – 6:22 AM
[BENGALURU] European stocks broke four weeks of gains on Friday, as the prospect of tighter lockdowns, slowdowns in vaccine shipments to the mainland and the resurgence of coronavirus cases in China dampened hopes of a rapid economic recovery.
The pan-European Stoxx 600 index closed 1% lower in its worst session since December 21, with losses accelerating after Wall Street stocks fell in the wake of big bank profits.
The Stoxx 600 recorded a weekly decline of 0.8%, its first weekly decline since mid-December.
Adding to concerns, some EU countries are receiving fewer doses than expected of coronavirus vaccines as US pharmaceutical company Pfizer has slowed shipments of the vaccine developed with its German partner BioNTech. Shares of BioNTech fell 2.2 percent.
German Chancellor Angela Merkel called for “very swift action” to counter the spread of the coronavirus as the country saw a record number of deaths linked to the virus, while France said it would tighten its border controls in from Monday.
The German DAX fell 1.4% and France’s CAC 40 fell 1.2%. The UK’s FTSE 100 fell 1% despite data showing the UK economy contracted smaller than expected in November.
The mining and oil and gas sectors fell 3.1% and 2.6%, respectively, after Chinese authorities put more than 28 million people under new lockdowns, raising concerns over demand from the main consumer of raw materials.
Hopes of a major US fiscal stimulus propelled the Stoxx 600 to an 11-month high earlier this week, but markets retreated after US President-elect Joe Biden presented a $ 1.9 trillion proposal Americans who raised concerns about a tax hike.
“The positioning in the market had been quite aggressive so I guess it’s a break to breathe,” said Roger Jones, head of equities at London & Capital.
“The roll-out and speed of vaccination is becoming increasingly important and the market is ready to consider an extended lockdown period if it is a relatively short period.” German enterprise software group SAP closed 0.7 percent lower, wiping out initial gains after releasing preliminary annual results that were in the high end.
Siemens Energy AG fell 6.3% after General Electric Co accused a subsidiary of the electricity distribution company of using stolen trade secrets to rig bids for lucrative contracts.
French grocer Carrefour fell nearly 3% after the French government all but killed a possible US $ 20 billion takeover by Canada Alimentation Couche-Tard.