European stocks slide as stimulus hopes set against Covid crisis

By StockHastix On Jan 25, 2021

</ifQrame></div> <div> European equities drifted lower for the second consecutive session on Monday, as investors focused on the pace of the vaccine rollout and the pandemic relief bill being hammered out on Capitol Hill. The prospect of an extra $1.9tn in fiscal stimulus has helped to lift stocks this month. But officials in the Biden administration are working to head off Republican concerns that the spending is excessive. During a Sunday call with lawmakers, some Republicans pushed for a smaller plan targeting vaccine distribution that would strip out campaign pledges from President Biden, including the raising of the minimum wage. In Europe, the continent-wide Stoxx 600 index was down 0.5 per cent by midday, while London’s FTSE 100 benchmark dropped 0.6 per cent and Frankfurt’s Xetra Dax sank more than 1 per cent. Sector-by-sector performance suggested the rotation out of technology and into economically sensitive sectors, sparked by the arrival of Covid-19 vaccines, had been put on hold. Energy, real estate and financial services stocks lagged on the Stoxx 600, while tech and healthcare shares led the benchmark. In Asia, China’s CSI 300 index ended 1 per cent higher, with prices up across most sectors. Hong Kong’s Hang Seng rose 2.4 per cent. “We’ve seen a positive day in Asia, and what’s driving the market is the ongoing discussion over the stimulus in the US,” said Joost van Leenders, senior investment strategist at Kempen Capital Management. Tech stocks led the charge in Hong Kong, with shares in internet group Tencent up almost 11 per cent. Tencent-backed livestreaming platform Kuaishou plan to raise up to $6.3bn in a Hong Kong initial public offering, the Financial Times reported on Monday. “We’re expecting Kuaishou will be very hot,” said Dickie Wong, head of research at Hong Kong-based broker Kingston Securities. “That is boosting not only Tencent’s share price but also most internet-related companies.” But the economic cost of the coronavirus pandemic continues to weigh on investor confidence. Jim Reid, strategist at Deutsche Bank, said vaccinations were being rolled out slower than expected in virtually all large countries and “even in countries where it’s been quicker . . . the one-dose-first strategy means that full protection will be slower to materialise”. “It also doesn’t seem to be the case that just vaccinating the vulnerable will be enough to lift most restrictions as I’d expected,” he added. Some investors are, however, looking beyond the health crisis. “There’s a bit of a tug of war between concern over the lockdowns and optimism over the rollout of the Covid-19 vaccinations, but I think the market will continue to look ahead,” Mr van Leenders said. Optimism over a recovery in fuel demand continued to lift oil prices. Brent crude rose 0.2 per cent to just under $56 a barrel, leaving the international benchmark hovering near its highest price since February. Attention will turn to a wave of earnings results this week, with Apple, Facebook and Tesla scheduled to release updates. Analysts will be watching to see if earnings progress can support rising valuations, with some veteran investors warning of a “bubble” in prices. Tech stocks, which have prospered during the pandemic, were set to outperform on Wall Street later. Futures contracts tracking the blue-chip S&P 500 index pointed to a rise of 0.1 per cent at the opening bell, while those for the tech-heavy Nasdaq 100 gained 1 per cent. <div class="stock-160" style="text-align: center; " id="stock-1615350508"><iframe src="https://cdn.plus500.com/Media/Buttons/Responsive/57113/index.html?set=Buy_Sell_Buttons&language=EN&country=GB&url=https%3A%2F%2Fwww.plus500.co.uk%2F%3Fid%3D128619%26pl%3D2&isRW=1" width="160" height="70" scrolling="no" frameborder="0" style="border:none">

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