European stock rally falters as virus cases surge

European stocks fell from over 10-month highs on Monday after rallying last week, as investors feared a surge in coronavirus cases across the continent and mainland China could delay an economic recovery.

Reuters | Updated: 11-01-2021 15:06 IST | Created: 11-01-2021 15:06 IST
European stock rally falters as virus cases surge

European stocks fell from over 10-month highs on Monday after rallying last week, as investors feared a surge in coronavirus cases across the continent and mainland China could delay an economic recovery. The pan-European STOXX 600 index fell 0.4%, easing from its February 2020 peak hit on Friday. Germany's DAX index shed 0.7% after hitting all-time highs last week and France's CAC 40 was down 0.5%.

Stock exchange operator Euronext said it had resolved a technical issue that affected trading on futures contracts tied to the CAC 40. Investors piled into undervalued segments of the market including banks, energy and mining last week after a "blue sweep" in the crucial U.S. Senate run-off elections in Georgia raised hopes of larger U.S. fiscal stimulus. Wall Street and Asian stocks hit all-time highs last week, while UK equities added more than 6%.

"What's driving the market is optimism that we will have more U.S. fiscal stimulus, but the question is are all the prerequisites for a real reflation in place," said Elwin de Groot, Rabobank's head of macro strategy. "I would say the answer to that is no. We still need to cope with the new wave of virus infections, and it's taking quite a bit of time in many countries to rollout vaccines."

Germany reported an increase in coronavirus cases even as most of Europe was under the strictest restrictions, while China saw its biggest daily increase in infections in more than five months. In an effort to curb the spread of the virus, Britain is ramping up its mass rollout of COVID-19 vaccinations as its top medical officer warned that the next few weeks of the pandemic will be the worst yet, with record deaths and cases hitting records.

Oil majors BP, Royal Dutch Shell and Total fell as crude prices retreated on renewed fears around global fuel demand amid rising cases. Mining stocks shed 0.9% as a stronger dollar weighed on commodity prices.

Banks and financial services companies were among the few gainers, benefitting from a recent rise in borrowing costs, while rate-sensitive utilities dropped 1.4%. Among individual stocks, Sanofi rose 0.7% after the French drugmaker bought Kymab, a British clinical-stage biopharmaceutical company for an upfront payment of $1.1 billion.

Britain's biggest sportswear retailer JD Sports jumped 4.7% after it forecast fiscal 2021 profit to be "significantly ahead" of current market expectations.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


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