Europe Markets Investors Monitor US-China Tensions and Earnings
Economic News: On Monday, European stocks closed slightly lower as investors monitored rising China-US diplomatic tensions.
Stock markets tumbled after the U.K. imposed quarantine measures on people returning from Spain.
The pan-European STOXX 600 also dropped close to 0.3%. Travel and leisure stocks tumbled over 3.3%, leading to losses while essential resources rose by 1.3%.
European stocks struggled to keep up the overnight trend in Asia where stocks widely advanced. They advanced after data showed that China’s industrial profit soared in June as the economy looks to bounce back from the coronavirus-induced shutdowns.
However, after the fraying US-China diplomatic relation, investors remain cautious, which led to the U.S. consulate in Chengdu shutting on Monday. The U.S. consulate in Chengdu shut down in compliance with a retaliatory measure in China after the U.S. ordered the Chinese embassy’s closure in Houston.
The US-China tensions and the lingering fears about the coronavirus pandemic in the U.S., and globally, also pushed gold prices to a new record high early on Monday as investors sought safety.
Spot gold rose as high as $1,943.9275 per ounce during Asia Pacific trading hours.
According to Mark Meadows, Trump administration officials and the Senate Republicans had agreed in principle on a new coronavirus relief bill. They are likely to present the bill on Monday afternoon and expect the relief to be around $1 trillion.
Mark Meadows is the Stateside, White House Chief of Staff.
German business sentiments saw a further recovery in July. According to Ifo Institute, the business climate index unexpectedly rose to 90.5 from an upwardly revised 86.3 in June.
Travel stocks plummeting
On Sunday, Tui announced that it would cancel all holidays from the U.K. to mainland Spain until August 9. The announcement came after the British government imposed a two-week quarantine on anyone returning from Spain.
Despite the surge in new cases on the mainland, the Spanish foreign ministry insisted that its outbreak was under control.
Tui, which is Europe’s largest holiday firm, saw its shares plunge by 11%.
On Monday, Ryanair reported a net loss of $216.4 million for the first quarter of its fiscal year 2021, slightly exceeding market expectations. Ryanair warned that the next 12 months would be challenging. The Irish low-cost airline’s shares dropped by almost 4%.
On Monday, airline shares tumbled across the board following the U.K. quarantine decision. Easyjet and IAG (British airways parent) both fell around 8%.
Lufthansa dropped 5% while Cruise operator Carnival also fell more than 8%. At the top of the European blue-chip index, British miner Polymetal International rose by 7%.