Europe Stocks Fall as U.K. Ends With Worst Annual Drop Since ‘08
(Bloomberg) -- European stocks inched lower on the final trading day of a rollercoaster year, with the U.K.’s FTSE 100 benchmark posting its worst annual drop since the global financial crisis.
The FTSE 100 slipped 1.5% by the close of the shortened session, ending the year with a loss of 14%, its biggest drop since 2008. Overall, the Stoxx Europe 600 Index fell 0.3% on the day, posting a loss of 4% for 2020. Trading volume was muted, with many markets already closed for New Year’s eve including Germany, Switzerland and Italy.
“With the U.K. exiting the EU stifled by a blanket of tier 3 and 4 restrictions, stocks are understandably risk averse as we head into the New Year,” Joshua Mahony, senior market analyst at IG, wrote in a note. “However, while short-term uncertainty will bring volatility, the promise of a spring renewal is likely to bring plenty of upside in 2021.”
European shares have rebounded from the almost seven-year low reached in March, first boosted by broad stimulus measures, and later by optimism that coronavirus vaccines will help restore economic normalcy. Greater political clarity also helped risk assets following the U.S. election and a Brexit deal.
Still, the impact of Covid-19 is evident in the winners and losers of 2020, with growth sectors such as technology and consumer companies coming out on top, while banks and energy have lagged. The unique nature of the pandemic also hurt travel and leisure shares and service-oriented industries, while boosting stay-at-home trades.
Among major European markets, Spain has fared the worst, with the IBEX Index down 15% for its biggest annual drop since 2010. The gauge has a heavy weighting of financial and tourism-related stocks.
The U.K. also underperformed, although it rebounded in recent sessions after the Brexit-trade deal was secured. Denmark and Sweden emerged as Europe’s winners, thanks to digital, medical equipment and renewable energy stocks. Germany’s DAX Index also outperformed in 2020, rising to a record high earlier this week.
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