Eurozone stocks down as Covid surges
Eurozone stock markets and the euro slid Wednesday as traders tracked regional fallout from surging Covid cases.
Meanwhile the US dollar was moving higher and Wall Street stocks fell as investors awaited minutes of the last Federal Reserve policy meeting and digested a trove of data.
“The dollar has extended its gains further and is set to end higher for the fifth consecutive week, supported by rising yields amid faster tapering expectations, stronger data and troubles for the eurozone with surging Covid cases,” said ThinkMarkets analyst Fawad Razaqzada.
Recent market movements suggest that the Fed could taper, or wind down, its bond-buying programme quicker than first flagged and hike US interest rates next year as the economy recovers and inflation surges.
The New Zealand central bank on Wednesday lifted its rates for a second successive month.
US stocks fell in intitial trading, with the Dow shedding 0.6 percent, despite data showing that initial claims for jobless benefits falling to 199,000 last week, a level not only below the Covid-19 pandemic caused mass layoffs, but also the lowest reading since November 1969.
On the oil market, prices dipped despite the United States and other countries releasing less stockpiled crude than expected.
A recent surge in oil prices has added to concerns that inflation — already at multi-year highs — will continue to rise, putting further pressure on banks to scale back the easy money policies put in place at the start of the pandemic and crucial to an 18-month rally for stock markets.
The head of the International Energy Agency called on OPEC to take “necessary steps” to lower oil prices at its next meeting.
– Europe lockdown fear –
Investors are increasingly worried about soaring Covid cases in Europe.
“Rising Covid-19 cases in Europe and fears of an accelerated tapering programme in the US are currently unsettling investors,” noted Richard Hunter, head of markets at Interactive Investor.
Several countries in Europe have introduced strict containment measures to fight a resurgence of Covid, with Austria returning to a partial lockdown and some fearing Germany, the continent’s biggest economy, will follow suit.
Meanwhile, the European Union health agency called Wednesday on member states to “urgently” introduce anti-Covid measures to reduce the potentially “very high” burden the disease will have in December and January.
The director of the European Centre for Disease Prevention and Control, Andrea Ammon, recommended Covid booster shots for all adults over the age of 18.
Investors were also tracking political developments in Germany, where a centre-left-led alliance of parties announced a deal to form the next government, putting the Social Democrats (SPD) in charge for the first time in 16 years.
On the foreign exchange market, Turkey’s lira recovered some of its massive losses from a day earlier but still remained wedged close to all-time lows against the dollar after President Recep Tayyip Erdogan defended his backing of interest rate cuts despite soaring inflation.
– Key figures around 1430 GMT –
EURO STOXX 50: DOWN 0.9 percent at 4,244.88
New York – Dow: DOWN 0.6 percent at 35,605.33
Hong Kong – Hang Seng Index: UP 0.1 percent at 24,685.50 (close)
Shanghai – Composite: UP 0.1 percent at 3,592.70 (close)
Euro/dollar: DOWN at $1.1193 from $1.1251 at 2230 GMT
Euro/pound: DOWN at 83.96 pence from 84.03 pence
Pound/dollar: DOWN at $1.3334 from $1.3381
Dollar/yen: UP at 115.34 yen from 115.11 yen
Brent North Sea crude: DOWN 0.4 percent at $82.00 per barrel
West Texas Intermediate: DOWN 0.4 percent at $78.20 per barrel