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European stocks gained ground on Tuesday after their biggest slide since June, although the travel sector continued to struggle.
London’s FTSE 100 and block-wide Stoxx 600 were up 0.6 percent in morning trading, while the German Dax was up 0.9 percent. The rallies come after Monday’s tough sessions in Europe and Wall Street, in which the FTSE lost 3.4% and the S&P 500 1.2%, on concerns about the prospects for a global economic recovery.
Tuesday’s overall gains come despite news that both the UK and Spain are to impose stricter lockdown measures due to rising coronavirus infections.
The travel sector, which was hit hard on Monday by news of the worsening pandemic, lost more ground. British Airways owner International Airlines Group fell 1.8 percent, after losing 12 percent on Monday, while cruise operator Carnival lost 2.9 percent.
The British pound fell 0.4 percent to trade at $ 1.2760, its lowest level since July. In addition to pandemic anxiety, traders are increasingly concerned about the possibility of a no-deal Brexit.
Markets “crashed yesterday as renewed coronavirus fears, a sharp decline in global bank stocks and many other headwinds led to a strong sell-off of global risk assets,” said Jim Reid, analyst at Deutsche Bank. .
Investors will be on the lookout for Bank of England Governor Andrew Bailey for clues about the central bank’s intentions after he said last week that it was paving the way for a negative rate move, if deemed necessary. .
In the United States, Jay Powell, chairman of the Federal Reserve, will tell Congress that businesses affected by the pandemic may need “direct fiscal support” as Washington lawmakers struggle to agree on a stimulus package.
Futures tipped the S&P 500 down another 0.3 percent when US markets open later in the day.
Markets were “far from confident” in the Fed’s ability to generate 2 percent inflation, said Robert Rennie, Westpac’s head of global market strategy. He added that “multiple political tension points” in the United States, including a fight for a new Supreme Court nomination, had lowered the odds of further fiscal stimulus ahead of the November presidential election.
Rennie said investors were also getting nervous about a week-long holiday in China starting on October 1 and its impact on global demand for raw materials. Markets are showing “signs of weakening in a number of key commodities,” he added.
In the Asia-Pacific region, the sell-off of HSBC and Standard Chartered shares deepened. HSBC’s Hong Kong-listed shares fell 2 percent, while StanChart’s fell 3 percent, bringing the losses of each of the Asia-focused lenders to more than 10 percent in two days. The couple were among those named in media reports Monday that alleged international banks had flagged $ 2 trillion in suspicious transfers to US authorities against money laundering.
HSBC’s Hong Kong-listed shares have more than halved this year, falling to lows not seen since before the UK city’s transition to Chinese government in 1997, following Covid-19, the crash. interest rates and tensions between the United States and China affected his business.
Over the weekend, the Chinese state tabloid Global Times said the London-based bank was a candidate to be included in Beijing’s first list of “untrustworthy entities.” The as yet unpublished list is intended for companies deemed to have harmed Beijing’s interests.
Matt Peron, research director at Janus Henderson Investors, said Monday’s sell-off amounts to a “correction” in an upbeat market. “We think sentiment needs to cool down and become more realistic for the market to bottom out, and this could take a few weeks. Then we will need some clarity, or at least stability, on the Covid-19 and the electoral fronts for the market to go up from there, ”he said.
Oil prices stabilized on Tuesday, following a sell-off a day earlier triggered by concerns about the outlook for global demand. Brent crude, the international benchmark index, rose 0.3 percent to $ 41.55 a barrel.
Hong Kong’s benchmark Hang Seng index fell 0.9 percent, while China’s CSI 300 shares of Shanghai and Shenzhen extended their losses to fall 1.2 percent on Tuesday. Australia’s S & P / ASX 200 fell 0.7 percent. Markets in Japan were closed for a holiday.
