Europe open: Tech stocks hammered despite much improved PMIs

Stocks across Europe are retreating with continued US-China tensions weighing on sentiment even as analysts fret about the toll that Covid-19 outbreaks will take on economies as they try to reopen.

Overnight, Beijing ordered the closure of the American consulate in Chengdu in retaliation for Washington's decision to do the same with its diplomatic mission in Houston, Texas.

"Chinese stocks incurred heavy losses overnight on account of the strained political relationship, and the sour sentiment has spilled over to Europe," said David Madden at CMC Markets UK.

"Traders are fearful this could be the beginning of a tit-for-tat spat between the two largest economies in the world."

As of 1031 BST, the benchmark Stoxx 600 was down 1.51% to 368.0, alongside a 1.67% fall for the German Dax to 12,883.33 while the FTSE Mibtel was declining 1.51% to 20,145.70.

Euro/dollar meanwhile was adding 0.11% to 1.1609 while gold futures for next month delivery were up 0.17% to $1,893/oz. and fast approaching their 2011 highs.

To take note of, some analysts were increasingly on the outlook for the yellow metal, with veteran fund manager, Mark Mobius, telling Bloomberg TV: "I would be buying now and continue to buy, because gold is really on a run, it’s doing well."

“When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold and you see the gold price will rise as uncertainty."

From a sector standpoint meanwhile, Technology issues were the weakest segment in the market, with the Stoxx 600 sector gauge down 3.74%, tracking losses among US peers on Thursday.

Other cyclical areas of the stock market, including Travel&Leisure and Autos&Parts were also lower, falling by 1.56% and 1.49%, respectively.

But it wasn't all negative news on Friday, with two key surveys for manufacturing and services in the euro area pointing to a so-called 'V-shaped' recovery - at least as levels of output were concerned.

IHS Markit's Eurozone factory sector Purchasing Managers' Index jumped from 47.4 to 51.1 (consensus: 49.5) while that for services improved from 48.3 to 55.1 (consensus: 51.0).

However, said IHS Markit's chief business economist, Chris Williamson, "while the survey’s output measures hint at an initial v-shaped recovery, other indicators such as backlogs of work and employment warn of downside risks to the outlook.

"The concern is that the recovery could falter after this initial revival."