European Stocks Plunge on Stimulus Doubts
European stock markets extended the Thursday slide into Friday trade as investors have been showing concerns over rising coronavirus infections and doubts over the US federal stimulus deal. The markets also haven’t responded to positive US jobs data.
Initial claims for unemployment benefits dropped sharply to only 963,000 last week. This represents the lowest initial claim number since the pandemic took hold. The market analysts were expecting unemployment claims to stand around 1.1 million.
The pan-European Stoxx 600 slipped 0.5% on Thursday and extended the downside in Friday trade. The German DAX was also down 0.5% while the French CAC traded in the red throughout the session. The FTSE 100 plunged almost 1.50% on Thursday and the index futures are in red on Friday.
The trade tensions have significantly impacted investor’s sentiments. The officials from China and the United States are due to meet on Saturday as both countries are struggling to reach a common point over the trade agreement.
In addition, the United States has extended trade tariffs on European products. Last year, the US has imposed tariffs on Airbus, whiskey, and several other companies.
The US has generated $7.5 billion in revenue last year by imposing tariffs on European products. The world’s largest economy is planning to raise more money this summer by imposing new trade taxes on European and Chinese products.
Moreover, the investor’s sentiments are impacted by a lack of optimism over the trade deal. President Donald Trump said a deal is “not going to happen.”
What Does This Mean for Investors?
- Crude oil prices plunged amid economic growth concerns and lower demand.
- US Dollar slipped on stimulus-related worries.
- Euro gained momentum against the USD.
- Gold continues to trade around $1950 per ounce.
- British Pound regained momentum after experiencing the largest economic contraction.