By Callum Keown
European stocks recovered some ground early on Tuesday despite concerns over the spread of a new strain of COVID-19.
The continent’s major indexes suffered heavy losses on Monday as investors digested the discovery of a coronavirus variant in the U.K., which Prime Minister Boris Johnson said could be 70% more transmittable. More than 40 countries have now banned U.K. arrivals, while several countries, including Italy and Australia have also detected the new strain, further spooking the markets.
However, a degree of calm returned to equity markets on Tuesday. The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP +1.84% rose 1.2%, the German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.64% was 1.3% up for the day and the French CAC /zigman2/quotes/210597958/delayed FR:PX1 +1.57% climbed 1.4% after the trio all fell by more than 2% on Monday. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.95% and the S&P 500 /zigman2/quotes/210599714/realtime SPX +2.38% both fell into afternoon trading, while the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +3.01% ticked up.
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.62% rose 0.6% higher but missed out on the stronger gains of its European counterparts amid fears of another national lockdown in the new year and news that public sector borrowing has hit a record high.
“As usual, markets overshoot on the downside whenever there is trouble, which can be easily faded, and the lack of liquidity at this time of year can exaggerate moves in either direction,” Markets.com analyst Neil Wilson said.
Despite the market uptick, the picture across Europe failed to improve with more countries banning travel to the U.K. and working to identify cases of the new strain. France’s border with the U.K. remained closed to trade and travel as politicians continued discussions over a solution. More than 1,500 lorries were stuck in Kent waiting to leave the U.K. , according to a BBC report.
Brief optimism over a Brexit trade deal, following reports the U.K. had made the EU an offer on fishing rights, quickly subsided as the proposal was rejected, Bloomberg reported . The British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.3375% was 0.8% lower at $1.3358 into afternoon trading.
AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN +0.50% stock fell 1.5% after the British drugmaker and U.S. biopharma company Amgen said their experimental asthma drug tezepelumab failed to meet its primary endpoint of reducing patients’ dependence on steroids, in a Phase 3 trial.
After heavy losses on Monday, British Airways owner IAG /zigman2/quotes/208070069/delayed UK:IAG +6.95% , Lloyds Banking Group /zigman2/quotes/202285510/delayed UK:LLOY +0.01% and Barclays /zigman2/quotes/208409333/delayed UK:BARC +1.09% were among Europe’s biggest risers early on Tuesday.
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