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European Market Mixed with Earnings Reports, US Fed in Focus

A mixed earnings report in the European market led to a slight step up for its stocks. The threat of another surge in coronavirus cases lingers everywhere in anticipation of an announcement from the Federal Reserve.

The stock market is focusing on the EU bank sector this week. Deutsche Bank, Barclays, and Santander are waiting for the latest policy announcement from the Fed.

Deutsche Bank reported a second-quarter loss despite its strong performance and put aside 761 million euros to cover credit losses. Its stock inched up by 0.4.

Santander stocks reported a worse loss, of 12.6 billion euros, against market expectations, pushing stocks down by 3.6%. Barclays set aside 1.6 billion pounds and fell by 3.3%.

The German DAX index traded 0.1% lower. Meanwhile, the French CAC 40 and the UK FTSE indices increased by 0.8% and 0.2%, respectively.

A large driver of the overall European market is the retail sector. Stock trading led Next’s 7.3% jump to a four-month high when it announced better-than-expected figures for Q2. It also reinstated a higher full-year guidance.

Kering increased by 4.8% when it saw a smaller loss than anticipated in the second quarter. Puma stock, with similar results, rose by 4.1%.

In the medical sector, Sanofi and GlaxoSmithKline inched up by 0.8% and 0.9%, respectively. Both signed a deal to supply the UK with about 60 million doses of a possible coronavirus vaccine.

Other Stock Markets

In Asia, Japan’s Nikkei fell when the yen increased in its place, a weak start for the eastern earnings season. For now, Japan expects its economy to recover only by next year after a fall by the end of 2020.

Hong Kong businesses aren’t doing better as its leader Carrie Lam tightened lockdown measures due to the threat of another outbreak.

Shares in 49 countries tracked by the MSCI world equity index saw mixed corporate earnings in the European index.

Michael Hewson, chief market analyst at CMC Markets UK, said that worries for the global economy are taking over again. The resurgence of coronavirus cases around the world raises questions about whether the expected V-shaped recovery is likely to happen.

The United States experienced its biggest single-day death toll count spike since May this week. This forced some states to initiate stricter lockdowns once again and put their economies in peril.

All this news led to global airlines cutting their coronavirus recovery forecasts on Tuesday. Many of these companies believed their recovery would take until 2024 to bring back passenger traffic to pre-crisis levels.

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