European Stocks Close Mixed As COVID-19 Cases Rise, German Business Sentiment Falls in July
European stocks closed mixed on Monday as the German business sentiment declined unexpectedly in July amid rising COVID-19 cases.
The STOXX Europe 600 was down 0.17%, the German DAX had fallen 0.4%, and the FTSE 100 in the UK had slipped 0.12%. The French CAC 40 was flat with a positive bias, and the Swiss Market Index was down 0.79%.
The UK is close to removing the quarantine requirement for travelers arriving from France, with the country expected to be omitted from Britain’s amber-plus risk classification as soon as next week, The Times reported. France is expected to be removed from the amber list as officials acknowledge that the threat from the beta variant of the coronavirus, first detected in South Africa.
The European Commission is in advanced talks with the UK regarding the recognition of vaccine passports, Bloomberg News reported Friday, citing a diplomatic memorandum. Meanwhile, discussions with the US are being affected by its lack of federal certification similar to the bloc’s COVID pass. The commission is also engaged in “promising” negotiations with Canada, with hopes to reach an agreement by September when it starts to receive vaccinated non-US travelers.
China believes the European Union’s carbon border impost breaches international principles by unduly extending climate issues into the boundaries of trade, Reuters reported, citing a spokesman for China’s Ministry of Ecology and Environment. The European Commission is eyeing a CO2 tariff on polluting goods from 2026, which would compel companies to pay a premium to import carbon-intensive products, including steel. China said the tax undermines mutual trust in the global community and hurts prospects for economic growth.
Germany’s business expectations index fell to 101.2 in July from 103.7 in June, data from research firm Ifo Institute showed Monday. The reading was well under the forecast of 103.3.
On the corporate front, Faurecia (EO.PA) was down nearly 6% even after it affirmed its outlook for sales and operating margin for 2021 but raised its net cash flow target amid a strong first-half performance. The French automotive supplier continues to expect its full-year sales to top 16.5 billion euros ($19.46 billion) and its operating margin to be about 7% of sales, close to pre-pandemic levels. However, Faurecia upgraded its expected net cash flow to more than 500 million euros from the previous forecast of around 500 million euros. The guidance assumes global auto production of at least 39 million vehicles in the second half and no major lockdowns.
Royal Philips’ (PHIA.AS) net income in the first half of 2021 fell year over year as higher sales were more than offset by an increase in the cost of sales and expenses. Shares of the company were down over 4%. Net income attributable to shareholders slipped to 190 million euros in the six months, from 246 million euros a year before. EPS fell to 0.21 euro from 0.27 euro. Sales of the Netherlands-based medical technology company grew to 8.06 billion euros from 7.67 billion euros.