European Stocks Rebound as Autos, Banks Rally

On Friday, European stocks rose due to positive earnings updates from carmakers and Barclays. However, the markets were headed towards their biggest weekly decline in over a month because of nagging concerns regarding the economic impact of increasing coronavirus cases. There was a 0.9% increase in the pan-European STOXX 600 index with the FTSE 100 from London outperforming European ones after Barclays rose by 5.6% due to strong quarterly results. There was a 2.3% climb in carmaker Daimler, as it raised its economic outlook due to a jump in demand for luxury cars in the third quarter in China.

Things appeared to be favorable for sectors that are considered more economically sensitive, such as automakers, banks, and gas and oil. As far as European leaders are concerned, they were on their way for their best performance in a month in more than a year. Market strategists said that opposite forces are working in the markets currently. China and the United States are the two main global sources of growth and these two are still recovering. Therefore, some parts of the European market would benefit from the strength seen outside of Europe as well. However, the second wave has had an impact on the domestic part of the market, which is exposed to restrictions and mobility.

This trend was highlighted by a survey of purchasing managers, which indicated that in October, the German manufacturing sector had experienced a faster rate of expansion. But, there was a decline in service activity, which suggested that the largest economy in Europe is operating at two speeds. In the meanwhile, the global markets were operating with caution, as there are just less than two weeks to go before the November 3rd U.S. presidential elections. With the constantly increasing cases of coronavirus, France had reached new all-time highs in terms of cases on Thursday.

Therefore, the country was ready to widen a curfew that had been imposed earlier to include more than two-thirds of the population. Bruno Le Maire, the Finance Minister said that the GDP was likely to decline in the fourth quarter. He also added that the cost of the curfew measures could be around two billion euros or $2.36 billion. There was a 2.3% gain in France’s Renault after it said that it would have a positive cash flow from cars as sales were recovery and this would happen by the end of 2020.

There was a 2% fall in luxury group Kering, as its star brand Gucci didn’t perform at the same level as its rivals. InterContinental Hotels, owner of Holiday-Inn, declined by 0.7%, as they posted a fall of 53.4% in the quarterly revenue that’s generated by every available room. With the markets surrounded by uncertainty due to the upcoming elections in the United States and Brexit trade deal talks, nothing can be said about the future market movements. With the second wave of coronavirus making itself known, the economic recovery is bound to be affected and this will take its toll on the market.