(ABM FN-Dow Jones) Stock markets in Europe have started the new week on a weak note. Around noon, the Stoxx Europe 600 index was down 1.6 percent, the German DAX fell 1.8 percent and the French CAC 40 and British FTSE 100 lost 1.9 percent.
Market analyst Michael Hewson of CMC Markets explained the negative sentiment Monday on concerns about rapidly increasing delta variant infections of the coronavirus worldwide, leading countries to impose new travel restrictions again. In the UK it is ‘Freedom Day’ on Monday, as all restrictions are lifted, but here too the number of new covid cases is rising rapidly.
“Another concern for the markets is the outlook for future earnings growth for companies. The quarterly earnings reports released last week were mostly positive, but the focus is now shifting to what the outlook will be, also given that the corona cases are rising, making the economic picture less clear,” said Hewson.
Looking at the rest of the week, most attention will be focused on the European Central Bank’s interest rate decision on Thursday, according to currency analyst Ima Sammani of Monex Europe. This comes after the ECB recently announced its new monetary policy strategy. The ECB now aims for an inflation rate of exactly 2 percent.
According to the Monex analyst, September will be a more important meeting for the ECB “in terms of policy changes, but Thursday’s policy decision and especially the communication around it should set the tone of what policy will look like in the summer and how committed the ECB is to maintain its hitherto deaf approach,” said Sammani.
The euro/dollar was trading 0.3 percent lower this morning at 1.1775. Oil became 3 percent cheaper, trading below $70 a barrel.
On Sunday, OPEC+ reached an agreement on future production. It has been agreed that from August the monthly production will be increased by 400,000 barrels of oil per day until April 2022.
“400,000 barrels per day is slightly less than the market initially hoped, but a larger deficit has been averted,” said ABN AMRO energy economist Hans van Cleef.
More supply, combined with uncertainty about demand now that the delta variant creates new corona restrictions, will lead to downward pressure on the oil price, according to the economist.
“As speculators are positioned for more price gains, closing these long positions could also put pressure on the price,” added Van Cleef.
Company news
In the wake of falling commodity prices, Royal Dutch Shell fell 2 percent on Monday and BP 3 percent. Miners Rio Tinto and Anglo American also lost 2 to 3 percent. ArcelorMittal lost more than 3 percent, despite a price target increase by UBS.
Bank shares were also not in demand. Deutsche Bank, Société Générale and ING lost up to 3 percent.
The advancing delta variant of the coronavirus is causing new travel restrictions in France, among others. Aviation shares such as Air France-KLM and Deutsche Lufthansa lost up to 3 percent. Tui and easyJet even fell 4 percent.
In Brussels, the share of Barco lost more than 14 percent. Although the order book increased considerably in the first half of the year, turnover increased only slightly due to the corona crisis. Furthermore, it was announced Friday evening that CEO Jan de Witte is leaving and will be succeeded by Charles Beauduin and An Steegen as co-CEOs. Steegen comes from Umicore. KBC lowered Barco’s advice on Monday from Accumulating to Holding.
Futures Wall Street
US futures predict a lower open for Wall Street on Monday. The S&P 500, Dow Jones index and Nasdaq are heading for an average loss of 0.5 percent.
US stocks ended lower on Friday. The S&P 500 index fell 0.8 percent at a close of 4,327.16 points, the Dow Jones index lost 0.9 percent to 34,687.85 points and the Nasdaq lost 0.8 percent at 14,427.24 points.
ABM Financial News; [email protected]; Redactie: +31(0)20 26 28 999.
From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.
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