Markets

European Stocks Close Lower On Growth Concerns, U.S.-China Tensions

(RTTNews) - European stocks rallied from the session's lows, but still ended on a negative note on Thursday amid uncertainty about pace of economic recovery despite recent fairly encouraging economic data.

Escalating tensions between U.S. and China, and rising concerns about the relentless surge in new coronavirus cases in several parts across the world and fears of fresh lockdown measures have raised worries about global economic recovery.

Markets also digested the European Central Bank (ECB)'s monetary policy statement. The ECB today left its key interest rates and the size of asset purchases unchanged as policymakers weigh the effect of the previous actions.

The main refi rate was left unchanged at a record low zero and the deposit rate at -0.50%, in line with economists' expectations. The lending rate was kept at 0.25%.

The ECB said, "The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics."

The ECB also said it will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of EUR 1,350 billion.

"These purchases contribute to easing the overall monetary policy stance, thereby helping to offset the pandemic-related downward shift in the projected path of inflation...," the central bank said.

"This allows the Governing Council to effectively stave off risks to the smooth transmission of monetary policy."

Further, the bank said the net purchases under the asset purchase programme (APP) will continue at a monthly pace of EUR 20 billion, together with the purchases under the additional EUR 120 billion temporary envelope until the end of the year.

The UK unemployment remained unchanged in three months to May, data from the Office for National Statistics showed. In three months to May, the jobless rate was largely unchanged at 3.9%, well below economists' forecast of 4.2%.

The ONS said early indicators for June suggested that the number of employees on payrolls fell around 650,000 compared to March. The employment rate rose 0.3 percentage points to 76.4% in three months to May.

The euro area trade surplus increased sharply in May to a seasonally adjusted EUR 8 billion from EUR 1.6 billion in April, as the relaxation of coronavirus containment measures boosted both exports and imports, data from Eurostat revealed.

Exports increased 7.9% month-on-month in May and imports grew 3.2%. On a yearly basis, exports declined 29.5% and imports were down 26.7% in May.

Consequently, the trade surplus declined to EUR 9.4 billion from EUR 20.7 billion in the same period last year.

France's consumer price inflation eased more than estimated in June, final data from the statistical office Insee showed. The consumer prices index rose 0.2% in June, after a 0.4% increase in May. In the initial estimate, inflation was 0.1%.

The pace of decline in new car registrations in the EU slowed sharply in June as countries in the bloc gradually reopened their economies after the lockdown imposed to fight the coronavirus, or Covid-19, pandemic.

Registrations of new passenger cars in the EU dropped 22.3% year-on-year to 949,722 units in June, figures from the European Automobile Manufacturers Association, or ACEA, showed.

In geopolitical news, U.S. Secretary of State Mike Pompeo said the U.S. would impose visa restrictions on Chinese firms like Huawei Technologies that he accused of facilitating human rights violations.

In the U.K. market, TUI closed lower by about 4.4%. Smith & Nephew shed 3.7%. Meggitt, Whitbread, Compass Group, British American Tobacco, Carnival, Burberry Group, Associated British Foods, BAE Systems, IAG, Melrose and Aveva Group lost 1.75% to 3.7%.

On the other hand, WPP and SSE both ended higher by about 2.3%. BT Group, Kingfisher, Next, Halma, M&G and BP also closed higher.

In the German market, Wirecard plunged nearly 7% and Lufthansa shed about 4.7%. Infineon Technologies, Vonovia, Fresenius, Merck, Adidas, Bayer and SAP lost 1.3 to 2.4%, while E.ON and RWE closed notably higher.

In France, Airbus Group shares shed about 3.2%. Atos declined 2.3%, while Essilor, Hermes International, LOreal, Safran and Capgemini ended lower by 1.2 to 1.7%.

Technip, Publicis Groupe, Renault and Legrand gained 1.8 to 2.5%, while Societe Generale and Bouygues moved up 1.5% and 1.3%, respectively.

Swiss luxury goods group Compagnie Financiere Richemont shares declined sharply after first-quarter total sales fell 47%, hurt by strong impact from Covid-19 pandemic.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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