European Shares to Make Weekly Losses as Virus Cases Increase

On Friday, European shares finally bounced back from their two-week lows, but they were still on track for weekly losses after a sell-off. This was prompted by fears of a second wave of coronavirus infections across the continent, doubts about additional U.S. fiscal stimulus, and the uncertainty due to Brexit. There was a 0.9% gain in the pan-European STOXX 600 index after it had posted its worst session on Thursday in the last three weeks. There was a 2.9% increase in auto stocks after Volvo and Daimler announced stronger-than-expected profits for the third quarter. Fears are on the rise due to a resurgence of COVID-19 cases across Europe, as more sweeping lockdowns are expected.

Two of the richest cities in Europe, Paris and London, are once again living under the shadow of social restrictions imposed by the state. Market analysts said that this gives rise to very real fears that what may seem like a stop-gap measure may actually turn out to be something that takes longer. If this happens, it would cause hundreds of businesses to collapse, not to mention that an already fragile economy, which is recovering, will be decimated. On Friday, the focus will be more on how Brexit negotiations will progress.

British Prime Minister, Boris Johnson is set to respond to the demand of the European Union that they either give more concessions for signing a trade deal or should prepare for a rather disorder exit within the next three months. There was a 1.2% increase in London’s FTSE 100, but it remained on track to end a gaining streak in the last two weeks. Likewise, the STOXX 600 was also on its way to decline for the first time in three weeks, as demand for global equities was severely dented by mixed signals on whether more fiscal stimulus would be provided by Washington, ahead of the US presidential elections in November.

On Thursday, the U.S. President Donald Trump said that he was ready to increase his offer of a $1.8 trillion for making a deal with Democrats in the Congress. However, Mitch McConnell, the Senate Majority Leader and fellow Republican, shot down this idea. Market strategists said that this on-again-off-again relationship with the possibilities of a stimulus is masking the fact that there may be uncertainty just ahead and things may remain choppy for quite a while. In regard to company news, there was a 15.8% increase in Thyssenkrupp, as a report stated that a bid will be made for the ailing steel unit of the firm by Liberty Steel Group, as soon as Friday.

There was also a 6.8% jump in LVMH as the increasing sales of the Louis Vuitton handbags enabled it to contain the fallout from the COVID-19 crisis in the third quarter of the year. There was a more than 3% increase in the shares of other manufacturers of luxury goods like Burberry and Moncler. Real estate and telecoms were amongst the few that declined in the morning trading session.