Markets

European Stocks Close Lower On Growth Worries, Geo-political Tensions

(RTTNews) - European markets ended lower on Tuesday as worries over simmering U.S.-China tensions, surging coronavirus cases and fears of another large scale lockdown hurt investor sentiment and pushed down stock prices.

The mood was cautious with investors looking ahead to the European Central Bank's monetary policy meeting and the European Union Summit, scheduled to take place later this week.

Following a surge in new coronavirus cases, several U.S. states are likely to resort to another lockdown. Already, California Governor Gavin Newscom has ordered the reintroduction of coronavirus-related restrictions, aiming to contain the spread of the pandemic.

In Germany, Infineon Technologies declined more than 5%. Adidas, Wirecard, Fresenius, SAP and Lufthansa lost 2.4 to 3.3%. Merck, BMW, Volkswagen and Fresenius Medical Care also declined sharply.

On the other hand, HeidelbergCement climbed up 3.2% and Munich RE gained 1.4%, while Allianz and E.ON both ended higher by about 0.8%.

In France, STMicroElectronics, Worldline, Dassault Systemes, Accor, Safran, Hermes International, Airbus Group and Danone lost 2 .3 to 4.1%, while Carrefour, Orange and Technip rose sharply.

In the U.K. market, Scottish Mortgage shares plunged more than 7%. Meggit and Carnival lost 6.7% and 6.1%, respectively. TUI, Halma, Hargreaves Lansdown, JD Sports Fashion, Rolls-Royce Holdings, Persimmon, Informa, IAG and Coca-Cola lost 2 to 5%.

BT Group, Imperial Brands, Royal Dutch Shell, BP, CRH, Phoenix Group Holdings, WPP and Admiral Group ended with strong gains.

The pan European Stoxx 600 ended down 0.84%. Germany's DAX declined 0.8%, France's CAC 40 shed 0.96% and Switzerland's SMI lost 0.4%, while the U.K.'s FTSE 100 edged up 0.06%.

Among other markets in Europe, Belgium, Czech Republic, Denmark, Greece, Ireland, Netherlands, Poland, Portugal, Russia, Spain, Sweden and Turkey ended weak, while Austria, Finland, Iceland and Norway closed higher.

In economic news, data from the Office for National Statistics showed the UK economy expanded in May after contracting the most on record in April, as measures to curb the spread of coronavirus were relaxed. Gross domestic product grew 1.8% in May from April, when it was down 20.3%. However, this was weaker than the expected growth of 5.5%.

The dominant service sector grew 0.9% after contracting 18.9%. The largest positive contributor to the increase was the wholesale, retail and repair of motor vehicles.

Industrial production logged a notable growth of 6%, following a 20.2% fall. At the same time, manufacturing was up 8.4% versus a 24.4% drop in the previous month. Nonetheless, industrial output was 19.1% lower than the pre Covid-19 level in February. In three month to May, the economy shrank 19.1%, following a 10.8% fall in April.

German inflation rebounded from a 45-month low in June, climbing to 0.9%, from 0.6 percent in May, data from Destatis showed.

German economic sentiment weakened in July, survey data from the ZEW - Leibniz Centre for European Economic Research showed Tuesday. The ZEW Indicator of Economic Sentiment fell to 59.3 in July from 63.4 in June. The score was forecast to rise to 60.0.

Meanwhile, the assessment of the current situation improved slightly for the second time since January 2020. The current conditions index rose to -80.9 from -83.1 in the previous month.

Economists had forecast the current conditions indicator to climb to -65.0 in July.

Switzerland's Federal Statistical Office reported that Swiss producer and import prices fell 3.5% year-on-year in June. The producer price index fell 2% annually in June and import prices decreased 6.5%. On a monthly basis, producer and import prices rose 0.5% in June.

On a monthly basis, consumer prices gained 0.6% in June, after a 0.1% fall in May, the report said. Inflation, based on the EU measure of harmonized index of consumer prices, accelerated to 0.8% from 0.5% in May. Compared to the previous month, the HICP gained 0.7% after remaining unchanged in May.

In geopolitical news, U.S.-China tensions intensified after the Trump administration rejected China's expansive maritime claims in the South China Sea, a move that Beijing criticized as inciting tensions in the region.

In another development, the Trump administration plans to scrap a 2013 agreement between U.S. and Chinese auditing authorities, a senior State Department official reportedly said.

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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