European stocks were mostly withdrawn on Friday morning as European Union leaders prepare to discuss a deal on the bloc’s key coronavirus recovery package, while US cases continue to skyrocket.
After a cautiously optimistic open, the pan-European Stoxx 600 slipped 0.2% below the flat line for about an hour in trade. Automobiles rose 1.7%, while banks and travel stocks fell 1.4% to lead the losses.
European stocks appear poised to follow the cautious tone seen overnight in Asia, where the markets were a mixed bag in trading on Friday afternoon.
European Union leaders will meet in Brussels on Friday to seek an agreement on the proposed 750 billion euros ($ 853.8 billion), which could face opposition from the frugal “four members” of Austria, Denmark, Sweden and the Netherlands. The bill may also be subject to a veto by Hungary, which has opposed linking the distribution of funds to defending the EU’s democratic values.
The market focus is also in tune with the steady increase in coronavirus cases in the US.
Data on unemployment claims in the United States was also slightly disappointed on Thursday, as the initial number of unemployment claims reached 1.3 million for the week ending July 11, the Labor Department said, without meeting expectations. of economists surveyed by Dow Jones for 1.25 million new applications.
Sino-American tensions have also affected sentiment after Reuters reported on Thursday, citing a source, that the administration of United States President Donald Trump is considering a travel ban on all members of the Chinese Communist Party ( CCP) and their families.
The Institute of International Finance said in a report on Thursday that global debt rose to a record $ 258 trillion in the first quarter of 2020, which represents 331% of world GDP (gross domestic product), and continues to rise.
In Europe, British Airways withdrew its entire fleet of Boeing 747s in the wake of the slowdown in global travel demand caused by global closure measures during the pandemic.
Earnings in focus
The earnings season continues to gather strength, with Daimler revealing ahead of its July 23 earnings report that it will post a less-than-expected 1.68 billion euros operating loss for the second quarter. The German automaker also announced Thursday that it will cease production of Mercedes-Benz sedans in the United States and Mexico in a bid to cut costs. Daimler’s shares rose 4.2% in early operations, which led to a broad rally for the automotive sector.
Rio Tinto reported a 1.5% increase in iron ore shipments on Friday, citing better demand from China as the world’s second-largest economy emerges from the coronavirus pandemic. Shares of the British metal and mining giant rose 0.7% more.
Danske Bank beat expectations for second-quarter net earnings, but warned of further job cuts as part of a four-year cost-cutting strategy, as the Danish lender tries to recover from a money laundering scandal in Estonia in 2017. The bank’s shares gained 1.5% in the first operations
Ericsson also beat earnings estimates due to stronger margins in telecommunications equipment sales, prompting the Swedish company to reaffirm its financial orientation for 2020 and 2022 and send the stock 8% higher to the top of the Stoxx 600.
At the other end of the European blue chip index, the Swedish property company Samhällsbyggnadsbolaget fell 6%.
On the data front, euro area industrial output and inflation figures are expected for June at 10 am London time.
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