(Reuters) – European stocks fell on Thursday, signs of deteriorating US-China relations adding to concerns about the pace of recovery after the economic slowdown caused by coronaviruses.
FILE PHOTO – The DAX graph of the German stock price index is shown on the Frankfurt Stock Exchange, Germany, on May 5, 2020. REUTERS / Staff
The pan-European STOXX 600 index finished down 0.8% in a volatile session, the German .GDAXI and .FCHI trade-sensitive indices each falling by more than 1%.
Relations between China and the United States have deteriorated as Washington accused Beijing of mismanaging the coronavirus epidemic, blocking the recovery of the market in recent weeks.
US Secretary of State Mike Pompeo took on a new target Wednesday against China, calling the $ 2 billion it has promised to fight the pandemic “paltry”. A Beijing official said that China would not back down in the face of rising tensions.
At the same time, a survey released earlier showed that the devastating effect of the pandemic on the eurozone economy eased somewhat in May as closures were eased, but it was still far from marking growth.
After hitting bottom in April, IHS Markit’s Flash Composite Purchasing Managers index recovered to 30.5 from 13.6 in April, but remains well below 50 points between growth and contraction.
“We think the markets are valued perfectly in the hope that there is only smoothness of navigation,” wrote strategists Cantor Fitzgerald in a note.
“If the cases (COVID-19) were to reappear, it would remind investors that the path back to growth will be slow and bumpy.” Add to that the meeting of the National Congress in China in the midst of rising American-Chinese tensions. ”
Global stock markets advanced this week, with optimism about easing blockages and talks on more stimulus for the battered eurozone pushing the STOXX 600 to its strongest close in three weeks Wednesday.
However, .SX7P, oil and gas .SEP banks and .SX8P tech companies were the biggest drag on the index on Thursday as risk appetite took a hit.
The Amsterdam-based telecommunications and cable group Altice Europe NV (ATCA.AS) fell 13.8% after posting worse-than-expected first-quarter core profit.
Whitbread Plc, owner of Premier Inn (WTB.L) fell 13.4% after announcing that it would seek £ 1.01 billion ($ 1.2 billion) in cash from shareholders to help overcome the COVID-19 crisis.
Airlines found relief, Lufthansa (LHAG.DE) rose 2.7% amid talks with the German government over a € 9 billion ($ 9.9 billion) bailout deal, with the state taking a 20% stake .
The low-cost British airline easyJet (EZJ.L) gained 4.4% after announcing that it would restart a small number of flights on June 15.
Sruthi Shankar’s reports to Bengaluru; Editing by Shounak Dasgupta, Kirsten Donovan