Europe: Stocks drop monthly as growth concerns emerge – The Business Times

Sat Aug 01, 2020 – 06:32 AM

[BENGALURU] European stocks posted their first monthly decline since a market sell off in March on Friday, as growing doubts about a global recovery from the coronavirus crisis overshadowed a batch of strong tech company earnings.

The pan-European Stoxx 600 index gave up its early gains to close 0.9% lower, under pressure from a weak opening for Wall Street as optimism in stellar earnings reports from big names in tech Amazon , Apple and Facebook faded.

An early read of the eurozone economy showed the bloc contracted 12.1% more than expected in the second quarter, its deepest contraction on record as lockdowns ravaged trade activity.

Spain’s benchmark fell 1.7 percent as the country recorded the worst output decline, while Italy and France’s GDP also fell sharply but less than expected.

“The lockout outings coupled with a massive stimulus resulted in a strong rebound in activity in the second quarter, which supported the rally in stocks, but the recovery appears to be stabilizing,” Barclays equity strategists wrote in a note.

“Overall, volatile markets may continue due to high uncertainty, low conviction and tight summer liquidity.”

The Stoxx 600 was down around 1% in July, with fears of a resurgence in Covid-19 cases also weighing on mood, with Britain imposing a tighter lockdown in parts of northern Europe. England, while Spain has seen an increase in new infections.

Tech stocks were among the few winners, up 0.7% after earnings topped Wall Street tech majors’ forecasts on Thursday.

The main winner of the Stoxx 600 was Finnish telecommunications network equipment maker Nokia, up 12.5% ​​after reporting an unexpected rise in underlying profit by cutting low-margin businesses.

“The strength of the numbers from the ‘four riders of technology’ is leading to a halo effect for the tech sector and a recovery of market-leading growth stocks,” said Neil Campling, head of research for TMT at Mirabaud Securities.

“Nokia’s results also bolster sentiment as the key to equipment inventory is always on the margins to get a feel for prices.

BNP Paribas rose 0.8% on higher than expected quarterly profit, driven by a sharp rise in fixed income transactions and strong demand for corporate finance.

Almost 50 percent of companies listed on the Stoxx 600 have so far released quarterly results, and 64 percent of them have beaten depressed profit expectations, according to data from Refinitiv.


The post Europe: Stocks drop monthly as growth concerns emerge – The Business Times appeared first on USNewsRank.