Europe’s main stock markets moved in mixed directions yesterday as traders watched whether EU leaders will be agree on a post-virus economic rescue plan.
Frankfurt’s DAX 30 ended the day 0.4% higher while in Paris the CAC 40 shed 0.3%. Outside the eurozone, London’ benchmark FTSE 100 index ended the day 0.6% higher.
“It was been a quiet trading session as the much-awaited EU summit to discuss the rescue fund began today,” said market analyst David Madden at CMC Markets UK.
The European Union was facing a “moment of truth”, France’s President Emmanuel Macron declared yesterday.
EU leaders were holding their first face-to-face summit in five months, but the gathering seems unlikely to bridge their divide over a huge 750bn euro ($847bn) recovery fund.
A determined band of northern members, led by the Netherlands, are holding out against doling out cash to their southern neighbours without strict conditions attached.
European Central Bank chief Christine Lagarde on Thursday leaned on EU governments, which have in the past left much of the heavy lifting to the central bank, to do more to kickstart their economies suffering from the pandemic.
“Recent gains in European indices and in the euro, which is enjoying some real strength against the dollar for the first time in over two years, could easily evaporate if Monday arrives without progress of some kind,” said Chris Beauchamp, chief market analyst at online trading platform IG.
Elsewhere yesterday, US stocks wobbled on mixed economic data.
US home construction surged 17.3% in June, the Commerce Department said, as the sector continued to gain ground following the disruption caused by the coronavirus pandemic.
However a US consumer sentiment survey fell to a three-month low, which is likely due to the increasing number of states reimposing restrictions and the end of supplementary unemployment benefits rapidly approaching.
An eventual green light to the 750bn euro plan should finally lead to joint European debt, but Investors are seeing their broader list of uncertainties and questions growing again.
Will the Covid-19 pandemic force economies into lockdown again? Will governments and central banks keep feeding the markets beast with stimulus? And finally, are tech shares losing their mojo?
Wall Street futures were pointing fractionally higher as results from asset manager BlackRock helped offset the near 10% skid by Netflix after the bell on Thursday after its subscriber numbers had flopped.
The S&P 500 has exceeded the Nasdaq by nearly 3 percentage points over the past week, its greatest five-day outperformance since late March, possibly as Investors take Profits from the likes of Amazon and other technology giants that have led Wall Street gains in recent months.
Asian stock markets closed mixed following sell-offs the previous session, as disappointing recent data jolted optimism over the economic recovery that has helped drive gains for the past few months.
Traders have for weeks been able to look past fresh spikes in coronavirus infections around the globe to focus on the trillions of dollars spent on government support and the easing of lockdowns.
But with containment measures being reintroduced in parts of the world that had appeared in control of the outbreak — including Hong Kong, Japan and Australia — confidence has taken a hit.
In London, the FTSE 100 closed up 0.6% to 6,290.30 points; Frankfurt — DAX 30 ended up 0.4% to 12,919.61 points; Paris — CAC 40 closed down 0.3% to 5,069.42 points and EURO STOXX 50 ended flat at 3,365.60 points yesterday.