By Steve Goldstein
European stocks headed lower on Thursday, continuing a choppy pattern this week of reacting to news about the effectiveness of vaccines against coronavirus as well as tightening restrictions in response to the spreading virus.
Up 0.4% on Wednesday, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.89% dropped 0.9%, with French oil group Total /zigman2/quotes/206172043/delayed FR:FP -0.23% and German insurer Allianz /zigman2/quotes/210095234/delayed XE:ALV +0.78% among the decliners. Even with the declines, the Stoxx Europe oil and gas index /zigman2/quotes/210599627/delayed XX:SXEP +0.86% has jumped 20% over the last month.
The German DAX /zigman2/quotes/210597999/delayed DX:DAX +1.34% , French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.45% , and U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.76% each saw similar declines.
U.S. hospitalizations for COVID-19 reached a fresh record of 79,410 on Thursday, according to the COVID tracking project, as New York City shut its schools.
An analysis of Google Mobility data on a 7-day average by BNP Paribas found Western Europe was the most affected region by the second wave, with activity 30 percentage points below baseline, though that is not as bad as the 55-point drop in April. The U.S. has been fairly steady at nearly 20 percentage points below baseline.
“If not for the U.S. Fed’s dovish reclines and multiple vaccines in the pipeline, one can only imagine how far into the deep end this selloff would have gone. And while the vaccine does offer bright green lights at the end of the tunnel, the tunnel just got more cavernous and lengthier,” said Stephen Innes, chief global market strategist at Axi.
A new study showed the vaccine being created by the University of Oxford and AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN +0.72% triggered a strong immune response in older adults, nudging the U.K. drugmaker’s shares up 0.1%.
The pandemic emergency purchase program and targeted longer-term refinancing operations are likely to remain the main tools for adjusting European Central Bank policy, said ECB President Christine Lagarde on Thursday. Lagarde reiterated the ECB would “recalibrate its instruments” as appropriate at its December meeting.
After the close, European leaders will discuss the €750 billion recovery fund, and whether Hungary and Poland will relinquish their veto of it. “We expect the two Central European member states to concede and remove their vetoes perhaps in return for some kind of nonbinding political declaration — if only because their government budgets will be the biggest losers (at the cost of about 11% of GDP each) if the other member states press ahead without them,” said Chris Scicluna, head of research for Daiwa in London.
Royal Mail /zigman2/quotes/204213037/delayed UK:RMG +1.18% shares jumped 6%, as the postal service and courier company hiked its revenue guidance after reporting an 88% drop in adjusted pretax profit in the six months to Sept. 27.
German forklift maker Kion /zigman2/quotes/203441117/delayed XE:KGX +1.94% dropped 9%, after saying it would issue 11% more shares, at a price still to be determined.
Thyssenkrupp /zigman2/quotes/208475822/delayed XE:TKA +0.57% shares dropped 9% as the company said it would cut 7,400 jobs. The German steelmaker forecast adjusted loss before interest and tax in the mid three-digit million euro range, after losing €1.6 billion before interest and tax on an adjusted basis in the year to Sept. 30.