By Barbara Kollmeyer
European stocks were poised for the worst week since the depths of the COVID-19 pandemic’s first wave, with markets struggling on Friday as investors absorbed technology earnings disappointment, COVID-19 worries, and a looming U.S. presidential election.
In choppy trading, the Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.41% inched up 0.1% after closing with a modest loss on Thursday. The index has dropped 5.8% for the week so far, which would be the worst return since the week of Mar. 13, when it fell 18.4%. That return would be just slightly worse than a 5.7% drop for the week of Jun. 12.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.37% was down 0.3% and the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.56% rose 0.3%. The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.07% was down 0.1%.
“Markets will remain vulnerable to more bad news on the COVID-19 front from the U.S. and Europe, while the nuances of the U.S. election will leave equities to follow other asset classes into the hunkering-down mode,” said Jeffrey Halley, senior market analyst at Oanda, in a note to clients.
Major U.S. indexes broke a four-session rout on Thursday , after third-quarter preliminary gross domestic product data indicated a rebound of activity following the pandemic-fueled recession. But Friday’s action was set to be a struggle as investors weighed up a crop of big tech results.
Reporting en masse late on Thursday, Apple, Amazon, Facebook /zigman2/quotes/205064656/composite FB +0.81% , and Google parent Alphabet /zigman2/quotes/202490156/composite GOOGL +1.30% all produced record sales amid the COVID-19 pandemic .
However, shares of Apple /zigman2/quotes/202934861/composite AAPL +0.48% fell as iPhone sales fell short, notably in China, and the company declined to give a financial forecast amid the pandemic. And shares of e-commerce giant Amazon /zigman2/quotes/210331248/composite AMZN +0.32% also slipped modestly after a projection for fourth-quarter operating profit of $1 billion to $4.5 billion undershot analysts’ average expectation of $5.81 billion .
Clouds continue to hang over investors as coronavirus cases climb on both sides of the Atlantic, and U.S. politicians have been unable to reach a stimulus deal ahead of the presidential election, now just four days away.
Some observers were disappointed that the European Central Bank didn’t bring forward stimulus at its meeting on Thursday, despite fresh concerns over the region’s economies. Those fears have been exacerbated by one-month lockdowns announced this week by the French and German governments.
The central bank did hint that it may announce more stimulus in December. Data showed the eurozone economy grew at a record pace in the third quarter, but has already stalled amid tough new restrictions, leaving Europe well behind the U.S. and Asia in its recovery from the crisis.
Data released on Friday showed rebounding growth in the third quarter for France, but the government downwardly revised its GDP forecast for 2020 , trying to account for an impact from new coronavirus-related restrictions.
Among Europe’s stocks on the move, tech companies were under pressure following those U.S. results, with business software group SAP /zigman2/quotes/207905606/composite SAP +0.98% /zigman2/quotes/202053813/delayed XE:SAP +0.60% down 1.6%. The German tech heavyweight kicked off a shaky week for technology stocks on Monday with a warning, and has lost 30% of its value this week as a result.
Elsewhere, shares of chip-equipment maker ASML Holding /zigman2/quotes/210293876/composite ASML +3.37% /zigman2/quotes/206208657/delayed NL:ASML +2.49% , another Stoxx heavyweight, fell 2% and Dialog Semiconductor /zigman2/quotes/202268164/delayed XE:DLG +5.78% shares fell 2.7%.
Shares of Air France-KLM /zigman2/quotes/205396176/delayed FR:AF +4.82% tumbled 4% after the airline swung to a heavy net loss in its third quarter , as it cut its capacity views and warned that it would see significantly lower earnings for the last three months of the year. Deutsche Lufthansa /zigman2/quotes/201210530/delayed XE:LHA -0.79% shares fell 2%.
European stocks were getting some support from some stability for oil prices /zigman2/quotes/209723049/delayed CL00 -0.02% . That is as Total /zigman2/quotes/206172043/delayed FR:FP +0.90% /zigman2/quotes/201824152/composite TOT +0.87% reported a profit fall in the third quarter , but the French energy giant said it benefited from a more favorable environment, and would maintain its interim dividend.
Prosus /zigman2/quotes/214038022/delayed NL:PRX -0.66% shares rose 2.5%, after the Dutch technology investor said it would buy $5 billion of its own shares and of its South African parent Naspers /zigman2/quotes/205954517/delayed ZA:NPN -0.62% .