European stock futures are in the red following a strong rally in the past few days. The investor’s optimism over the economic recovery is dented by England’s second-quarter gross domestic product contraction of above 20%.

The country officially entered into the recession, meaning slower jobs and business growth.

The country’s economic numbers are worst among the 27 member European Union. Despite that, an 8.7% growth in June has offered some relief to investor’s sentiments.

European stocks

“In our view, U.K. assets look undervalued. In this environment, we continue to maintain a preference for U.K. equities relative to other eurozone stocks and expect sterling to strengthen versus a weaker dollar over the next 12 months,” Dean Turner, UBS Global Wealth Management economist, said.

The coronavirus related concerns are also high as several countries have been reporting sharp growth in infections.

France and Germany are among the countries that are hit harder by the virus. However, the cases in the United States are falling at a sharp pace. Russia has launched a coronavirus vaccine while the United States government announced to buy 100 million doses of Moderna’s experimental coronavirus vaccine.

Daily infections doubled in France in the past 24 hours and daily virus infections grew above 1000 for the fourth straight day in Germany.

European stock

On the earnings front, the shares of the Just Eat Takeaway soared sharply after the company announced a steady increase in revenues and orders. Shares of Admiral Group jumped 7.3% as the insurance company announced a special dividend for common stockholders. The stock price of Dutch bank ABN Amro rallied almost 8% after topping second-quarter profit estimates.

What does it Mean for Investors?

  • Analysts suggest investors keep an eye on economic activities before placing investments.
  • US Dollar fell against that basket of currencies.
  • Euro and Gold gain on the dollar’s retreat.
  • Gold is currently trading around $1900.