Europe midday: Tougher Covid curbs keep lid on shares
European stocks were still lower at lunch on Monday as investors fretted over rising coronavirus cases across the continent and mainland China and the prospect of tougher curbs hitting the economy.
The pan-European STOXX 600 index fell 0.28%. Germany’s DAX was down 0.64% below 14,000 points, after hitting record highs last week. Germany has reported an increase in coronavirus cases and is moving towards tougher lockdown measures.
London's FTSE was down 0.44% as the government considered stricter measures in an effort to curb the spread of the virus driven by a UK variant of Covid-19 and an unwillingness by Britons to obey lockdown rules,
In the US, Dow Jones future were down 204 points as investors digested last week’s storming of the Capitol building in Washington by a mob incited by soon-to-be-former President Donald Trump, and the likely shape of any new stimulus measures.
"One other reason for the slightly weaker start to proceedings is an increase in coronavirus cases in China, which has thus far managed to avoid a second wave of infections, and where the economy is looking fairly resilient. If the virus regains a foothold here, as Chinese authorities impose new regional restrictions, that could well act as a brake on recent economic activity," said CMC Markets analyst Michael Hewson.
He added that Friday’s US payrolls report "underscored the challenges facing the new Biden administration when it comes to supporting the US economy" after the loss of 140k jobs in December.
"As a result, it sets us up for a huge fight in the Senate in respect of how big any new fiscal stimulus plan is likely to be when Biden takes up the reins of power...and while they are expected to be more expansive than Republican plans, there is no guarantee they will be anywhere near as large as outlined in the Democrats $3.4trn manifesto, from last year," he said.
"This is because, despite the Democrats regaining nominal control of the Senate, not all in the party are fiscal doves, with some leaning towards the hawkish side.
In equity news, Signature Aviation soared to top the gainers surged after Gatwick Airport co-owner Global Infrastructure Partners has swooped to buy the company for $4.63bn (£3.43bn), beating a rival offer from private equity outfit Blackstone Group and Microsoft founder Bill Gates.
Sanofi rose 0.7% after the French drugmaker bought Kymab, a British clinical-stage biopharmaceutical company for an upfront payment of $1.1bn.
JD Sports rallied after the company said it was confident headline pre-tax profit for the year to January 30 will be "significantly" ahead of current market expectations of around £295m as demand has remained robust throughout the second half.