European markets retreat as investors monitor data, Powell nomination, Covid surge
LONDON — European stocks pulled back on Tuesday as markets monitored a Covid-19 surge, the prospect of U.S. rate hikes and the latest purchasing manager’s index (PMI) data for the euro zone.
| TICKER | COMPANY | NAME | PRICE | CHANGE | %CHANGE | VOLUME |
|---|---|---|---|---|---|---|
| .FTSE | FTSE 100 | *FTSE | 7281.09 | 25.63 | 0.35 | 401110121 |
| .GDAXI | DAX | *DAX | 15956.24 | -159.45 | -0.99 | 54742398 |
| .FCHI | CAC 40 Index | CAC | 7048.24 | -56.76 | -0.8 | 46303492 |
The pan-European Stoxx 600 fell 0.9% by mid-afternoon, almost halving its earlier losses. Tech stocks dropped 2.5% while basic resources bucked the downward trend to add 0.8%
Euro zone business activity growth jumped unexpectedly in November, but a fresh wave of Covid-19 infections across the bloc and surging prices soured the outlook for December
IHS Markit’s flash composite PMI, a useful gauge of economic health, climbed to 55.8 in November from 54.2 in October, greatly outstripping expectations in a Reuters poll of economists for a fall to 53.2
However, optimism about the immediate future for economic activity ebbed, with the business expectations index falling to 66.6, its lowest reading since February, from 69.0 last month
French and German PMIs both came in stronger than expected in November, while manufacturing supply bottlenecks continued to drag on factory production and drive up inflationary pressures
On Monday, Germany’s Health Minister Jens Spahn warned that “probably by the end of this winter, pretty much everyone in Germany will be vaccinated, recovered or dead … That’s the reality,” he told a press conference. Germany is considering whether to implement stricter Covid measures and perhaps a partial lockdown like its neighbor, the Netherlands. Germany has one of the lower vaccination rates in western Europe.
Market participants are also digesting the announcement Monday that Federal Reserve Chair Jerome Powell was picked for a second four-year term to lead the central bank by President Joe Biden
The move has driven expectations that the central bank will stay on its monetary path as the economy recovers from the pandemic and attempts to combat inflation. Biden had been under pressure to name a more progressive Democrat, rather than keep Republican Powell in the role
Bets that the Fed will look to hike interest rates in 2022 have weakened the footing of risk assets
Powell has guided the U.S. central bank and the country’s economy through the pandemic recession, unleashing unprecedented monetary stimulus to keep financial markets afloat. His renomination now heads to the Senate for confirmation
