European Stock Futures Extend Decline Amid Bank of England's Bleak Economic Outlook
European stock futures extended the declining trend in Friday trading as Bank of England pointed slower economic recovery in the second half of the year. The European stock markets plunged sharply on Thursday after Bank of England left interest rates unchanged.
The U.K’s gross domestic product is likely to drop 20% in the second quarter from the final three months of last year. The full-year GDP is likely to contract 9.5% this year. Previously, the Monetary Policy Committee had predicted the U.K. GDP to recover beyond the near term. However, the central bank now says the economy would take a longer time to reach the pre-pandemic level.
The European indices dropped sharply despite improving industrial data.
Industrial order in Germany grew 27% from the previous month. The market analysts were expecting industrial orders to grow by 10%. In addition, automotive orders also grew significantly by 66.5% in July compared to the past month, but still standing below the pre-pandemic level.
Corporate earnings have also negatively impacted European stock market performance in Thursday trade. The shares of Glencore fell 8% as the company announced to halt its dividend payment strategy following a massive loss of $2.6 billion in the first half of the year.
The shares of Deutsche Lufthansa surged slightly as the passenger carrier has reported a significant quarterly loss due to travel restrictions in the wake of coronavirus spread. The airline says passenger demand is unlikely to return to pre-COVID levels in the next three years.
What Does This Mean for Traders?
- Sterling grew sharply after the BOE interest rate policy.
- Euro surged against the US dollar.
- Gold is on track for the ninth weekly gain in a row.
- The US dollar index continues trading around more than two year low.
- Futures on Wall Street are in red ahead of jobs data and concerns of the stimulus package.