European Equities Fall After Vaccine Blow, Stimulus Stalemate

(Bloomberg) -- European stocks declined on pessimism over deadlocked U.S. stimulus talks and a setback in coronavirus vaccine development.

The Stoxx Europe 600 Index closed down 0.6%, with banks and insurers falling the most. U.S. President Donald Trump urged Congress to “Go big or go home!!” on a coronavirus stimulus package, directly contradicting Senate Majority Leader Mitch McConnell’s plan to put a narrow bill on the Senate floor next week.

Separately, Johnson & Johnson temporarily halted its Covid-19 vaccine study saying a clinical trial participant experienced an unexplained illness.

European equities regained momentum in recent weeks after a pullback in late September. With the Stoxx 600 near a one-month high, investors are watching for updates on key catalysts such as U.S. stimulus talks and signs of corporate health in the earnings season.

“News that Johnson & Johnson has paused its covid trial due to an unexplained illness in a participant is keeping risk sentiment in check,” wrote Fiona Cincotta, a market analyst at City Index. “Given that a vaccine is the surest way to return to pre-covid levels of growth, the markets are particularly sensitive to vaccine developments and news.”

Among individual movers, SSE Plc gained 1.7% after agreeing to sell stakes in some energy ventures. MorphoSys AG slid 5.4% after saying it will offer 325 million euros ($383 million) of convertible bonds.

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