European Stocks Retreat On Virus Worries, Economic Growth
After posting the largest weekly drop, European stocks retreated at the beginning of the new week as concerns over the second coronavirus wave have significantly impacted investor’s sentiments.
Daily coronavirus infections hit a record level in the United States while the situation is worse in the European region. France plans to impose more social distancing restrictions while Spain and several other countries have imposed a curfew to avoid the virus spread. France confirmed 52,000 daily virus infection on Sunday.
Banks Support will be Short-term
Although banks have provided much needed support to the European stocks on Friday, the support is likely to remain short-term due to concerns over virus infections and slowing economic growth.
Stronger than expected performance from Barclays has lifted European stock indices on Friday. The robust financial numbers from the auto and oil & gas sector added to gains.
“Better than expected results from Barclays triggered renewed interest in banking shares, most of which are trading on depressed levels so value investors will be particularly interested,” said Russ Mould, investment director at AJ Bell.
European Stocks are Down on Economic Growth Revisions
The reports are showing that the second virus wave could significantly dent economic recovery forecasts. This is because the massive growth in virus infections are forcing governments to impose new social distancing restrictions.
The European region has already imposed new restrictions as virus infections reached new record levels.
The data on Friday hinted that eurozone economic activity declined in October. German services activity dropped in the latest month. The market participants expect a further decline in economic activities throughout the region. European stocks are in red on Monday.
For instance, French finance minister Bruno Le Maire said their gross domestic product is likely to contract strongly in the fourth quarter, with estimates that new restrictions would cost almost two billion euros to the economy.