U.S. stocks lowered on Friday along with European futures

 U.S. equity futures tumbled down along with European stocks as restrictions to combat escalating Covid-19 cases dampened some of the optimism over earnings and plans for additional fiscal stimulus. On the other hand, the U.S. currency strengthened for the first time during this week.

On Friday, the Nasdaq 100 and the S&P 500 futures signalled a down day for American stocks. On Thursday, the underlying indexes already eked out records on the back of some gains for tech companies. Furthermore, the European Stoxx 600 index declined by 1%. It headed for its second straight weekly plunge after a gauge of private-sector activity in the euro region had plummeted deeper into contraction territory. Besides, Germany also cut its forecast for economic growth. As a result, yields on Treasuries lowered along with German bunds, and crude oil tumbled down below $52 a barrel.

Overall, the S&P 500 futures declined by 0.6% on Friday, while the Stoxx Europe 600 Index lowered by 1%. Furthermore, the MSCI Asia Pacific Index shaved off 0.7%, and the MSCI Emerging Markets Index plummeted down by 0.9%.

In Europe, the Sterling weakened after Prime Minister Boris Johnson announced that Britain’s third lockdown could last into the summer. Disappointing economic data also added to traders’ misgivings. Stocks underperformed in Italy as well, while bond yields increased after reports claimed that Prime Minister Giuseppe Conte is considering early elections.

Global equity rally was boosted both by expectations of economic support and the rollout of Covid-19 vaccines this week. However, it is pausing now as traders contemplate still-troubling coronavirus trends. Meanwhile, President Joe Biden is pushing for $1.9 trillion in additional spending. He also unveiled a strategy to fight the infection while simultaneously warning the pandemic will worsen before it improves. Restrictions and lockdowns intensified around the globe, from Germany and Britain to Hong Kong. The European Central Bank issued warning that the euro area may see a double-dip recession.

What are the main factors influencing the market right now?

Jean-Francois Paren, the global head of market research at Credit Agricole, noted that recent news flow on the Covid-19 pandemic has not been favourable. According to him, after the post-election wave of optimism from the United States, stock markets have been left facing the reality of new lockdown measures and vaccine delivery, along with the perspective of a double-dip in Europe.

In addition, Italy expects significant delays to its vaccination program in the coming week as there was a drop in vaccine deliveries from manufacturers. The U.K. suffered its worst day in the pandemic and Germany announced that its Covid-19 vaccine shortages would last for the next six to eight weeks. Coronavirus fatalities in the country already passed 50,000, though.