The squares of the Old Continent still weak
European stock markets started the week on a weak note, with US listings at a standstill due to holidays. Milan experienced a loss of 0.3%, while Madrid fared slightly worse with a decline of 0.36%. London (-0.44%), Frankfurt (-0.66%), and Paris (-0.72%) also saw exchanges below the norm, with trading limited to 500 million euros in Piazza Affari.
The weak performance of the stock markets can be attributed to the drop in gold prices, which fell by 0.34% to $1,958.37 per ounce. Crude oil prices also experienced a decline, with WTI dropping by 0.64% to $71.32 per barrel. These declines in commodities prices led to selling pressure, particularly in the raw materials sector. Chemical giant Basf was hit hard, experiencing a decline of 2.59% after HSBC analysts downgraded their recommendation from ‘buy’ to ‘hold’.
Other companies in the raw materials sector also faced pressure, including Air Liquide (-3.26%), Antofagasta (-1.77%), Anglo American (-1.7%), and ArcelorMittal (-1.24%). However, some oil producers such as Shell (-0.54%), Eni (-0.48%), and BP (-0.29%) exercised caution. TotalEneregies, on the other hand, saw a slight increase of 0.1%.
In the semiconductor industry, Stm (-0.2%) and Infineon (+0.5%) had contrasting performances. The luxury sector suffered from uncertainties in the Chinese market, particularly due to tensions with the US over the future of Taiwan. Moncler experienced a decline of 1.6%, while Kering, Lvmh, and Richemont saw losses of 1.55%, 1.56%, and 1.4% respectively.
On a positive note, there were purchases on banks, with Italian Mps (+2%), Bper (+1.58%), and Unicredit (+1.2%) performing well. Standard Chartered also saw a gain of 1.54% in London, while SocGen experienced a 1.1% increase in Paris. However, NatWest (-0.74%) and Commerzbank (-0.29%) faced weakness.
Overall, the weak performance of European stock markets reflects the cautious sentiment among investors, influenced by the decline in gold and crude oil prices, as well as uncertainties in the raw materials and luxury sectors.
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Rse with a decrease of 0.5%. London also struggled, closing down 0.2%.
These weak performances were attributed to a variety of factors. One major concern for investors was the ongoing uncertainty surrounding Brexit. Talks between the UK and the European Union on a post-Brexit trade deal have yet to yield any concrete results, causing anxiety among market participants.
The COVID-19 pandemic also continued to weigh on European markets. The number of cases has been increasing in several countries, leading to fears of potential lockdowns and further disruption to economic activity. This has dampened investor sentiment and led to caution in the markets.
Furthermore, the lack of progress on a new stimulus package in the United States has also contributed to the market weakness. The negotiations between Democrats and Republicans seem to be at a stalemate, raising concerns over the future of economic support measures.
Looking ahead, analysts are cautiously optimistic about the prospects for European markets. The arrival of effective COVID-19 vaccines is seen as a positive development that could help spur economic recovery in the region. However, concerns over Brexit and the potential for further lockdown measures remain key risks that could dampen market sentiment.
Overall, European stock markets remain weak in the face of ongoing uncertainties. Investors will be closely monitoring developments on Brexit and the pandemic, as well as any progress on fiscal stimulus in the US, for potential catalysts that could drive market performance in the coming weeks.
It seems like European stock markets are off to a weak start this week. Let’s hope for a turnaround in the coming days.