European Stocks Slump From 11-Month High as Cyclical Shares Fall
European Stocks Slump From 11-Month High as Cyclical Shares Fall
(Bloomberg) -- European equities tumbled on Friday as cyclical stocks paced the retreat, after a three-day winning streak propelled the index to its highest level since February 2020.
The Stoxx 600 Index closed 1% lower in London, down the most in almost four weeks. This is its first weekly decline in five, with a drop of 0.8%. Energy stocks were among those leading the losses as a stronger dollar weighed on the oil price. Banking shares slumped after Wells Fargo & Co. posted disappointing fourth-quarter results.
Cyclicals like miners and automakers also fell as investors mulled President-elect Joe Biden’s coronavirus relief package, which could be watered down under congressional opposition. European stocks have risen in January as more economically sensitive sectors were boosted by hopes of more stimulus to support the recovery in growth.
However, risks persist as lockdowns and rising virus cases continue to weigh on the rebound in many major economies. U.S. consumer sentiment cooled more than forecast in January, while Pfizer Inc. has notified countries around the world that it will deliver fewer doses of its Covid-19 vaccine in the next three to four weeks.
“Clearly, more countries are strengthening their restrictions, there is concern about this U.K. variant making more inroads, and there is concern about vaccination, which is somewhat slow in some countries,” Frederique Carrier, head of investment strategy at RBC Wealth Management, said by phone. “But we’re still hoping that, by mid-year, there’ll be enough vaccinations that the economy can re-open.”
European equity funds attracted $2.2 billion of inflows in the week through Jan. 13, the most since June, Bank of America Corp. strategists said in a note today. However, the pandemic and its impact on businesses remains the main focus in the short term.
Investors are watching Wall Street banks’ earnings reports today for signals about the strength of the recovery. JPMorgan Chase & Co. posted record profit in the fourth quarter after a surge in trading and investment-banking fees, but cautioned that uncertainty remains and that it wasn’t reducing the money set aside for credit card losses. Citigroup Inc.’s fixed-income traders missed analysts’ estimates for the final months of 2020.
Italy’s FTSE MIB Index retreated 1.1% as Prime Minister Giuseppe Conte raced to forge a new majority to stay in power.
Among individual stocks in Europe today, Carrefour SA fell as much as 5.7% after France’s finance minister reiterated his opposition to a potential acquisition of the grocer by Canada’s Alimentation Couche-Tard Inc.
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