European Stocks Edge Higher After Worst Weekly Performance
European stocks moved higher on Monday after reporting worst weekly performance since mid-June amid concerns over the second coronavirus wave.
Several other factors including slower than expected economic growth also added to last week’s selloff. However, European stocks are in green on Monday, thanks to positive momentum from Asian stock markets and US stock futures.
Despite the gains at the beginning of the week, the market analysts are showing concerns over the trade war conflict between the United States and China. The world’s largest economy has constantly been making it difficult for Chinese companies to sell their products.
The shares of Chinese chipmaker SMIC dropped sharply in Monday trading as the US has imposed new restrictions on exports to the firm due to risks of military use. Previously, the US has announced to ban TikTok and Huawei.
The Chinese economy, on the other hand, started rebounding after experiencing the worst selloff early this year. Its industrial profit jumped to 19.1% in August from the previous year period.
Investors’ concerns over the second coronavirus wave could also weigh on investor’s sentiments and European stocks. This is because several European countries are planning to impose social distancing measures to avoid the second wave of the virus.
“New restrictions in Europe, less fiscal support, fading liquidity impulse, and election risk should weigh on activity in Q4,” European equity strategists at Barclays wrote in a note. “Economic surprises are starting to roll over from all-time high levels.”
European banks are among the biggest losers as shares of banks plunged to the lowest level in history due to lower global borrowing costs and increasing bad loans. The reports of the easy movement of dirty money added to the share price selloff.
Oil price continues to trade around the $40 a barrel level while Gold fell to around $1850 an ounce. The US dollar index remains strong around 94.50 mark against the basket of six major currencies.