European Stocks are in Negative Territory after Posting First Monthly Loss Since March
European stocks extended the downtrend in August as all major European and British indices are trading in a red. The investors have been showing concerns over the economic growth trends and the second wave of coronavirus.
The traders reacted to the reports of the European Union economic contraction of 12.1% in the second quarter compared to the first three months of this year. The eurozone economic leader Germany has reported a 10.1% contraction for the second quarter while France said its GDP plunged over 13% during the second quarter.
The pan-European Stoxx 600 has recorded the first monthly decline since March.
The index slid 0.9% in July, driven by poor stock price performance of travel and tourism-related companies. The shares of the EasyJet fell 22% in July and British Airlines parent IAG stock price has lost 20% of value in July alone.
The investors’ confidence has also been shattered by poor quarterly earnings reports. BNP Paribas has generated a net income decline of 7% year over year in the second quarter.
“The stock market has to look forward and most economic data looks backwards. Investors should be prepared for a choppy process of data digestion, but not be surprised that the market feels the future is better than the present and that unprecedented stimulus and liquidity exist to drive valuations,” David Bahnsen, chief investment officer at Bahnsen Group, said.
On the other hand, Asian stock stated a new month with small movements due to resurgence in coronavirus infections and increasing U.S.-China tension.
What Does it Mean?
- European futures are trading in negative territory.
- US stock futures are also in the red.
- Asian stock started the new month in a mixed fashion.
- The US dollar bounced slightly against the basket of other currencies.
- Euro struggled at the beginning of Monday trade.