European equity markets closed lower on Friday, with travel, banking and auto shares leading declines as a resurgence in COVID-19 cases across the continent rekindled fears about the pandemic’s effects on a nascent economic recovery.
The pan-European STOXX 600 retreated 0.7 percent, with the banking-heavy Spanish index down 2.2 percent and the French and Italian bourses more than 1 percent lower.
London’s FTSE 100 slipped 0.7 percent, with International Airlines Group, EasyJet PLC and cruise operator Carnival Corp down between 8 percent and 15 percent as talk of a second lockdown in the UK did the rounds after new COVID-19 cases almost doubled to 6,000 per day.
Travel and leisure was the worst-performing sector, down 3.5 percent.
Other European nations from Denmark to Greece announced new restrictions to curb surging COVID-19 infections in some of their largest cities.
“If the uptick in cases becomes strong enough that lockdowns have to be tightened to a point that it derails the economic recovery, then it becomes a risk factor,” Wisdom Tree Investments Inc associate director of research Mobeen Tahir said.
The banking index fell 2.6 percent, hitting its lowest level since May 26 and on course for record lows as major central banks pledged to keep interest rates lower for a long time, with the Bank of England looking at taking borrowing costs to sub-zero levels, if needed.
Sparking hopes of consolidation among lenders battling the fallout from the COVID-19 pandemic, CaixaBank SA agreed to buy state-owned Bankia SA for 4.3 billion euros (US$5.1 billion) to create Spain’s biggest domestic bank.
Bankia fell 4.8 percent and Caixabank was down 2.2 percent after rallying in the run-up to the announcement.
Swedbank AB, SEB SA, Handelsbanken AB and Nordea Bank AB were down between 1.8 percent and 5.3 percent on fears that the Swedish banks will bear the brunt of a proposed government “risk tax.”
Separately, Sweden’s financial watchdog said that it was investigating Swedbank for potential market abuse.
The STOXX 600 still eked out a 0.2 percent weekly gain as some major retail companies showed resilience in earnings earlier this week, and a string of takeovers enlivened global merger and acquisition activity.
The London Stock Exchange Group entered exclusive talks to sell Borsa Italiana SpA to France’s Euronext NV, driving its shares up 4.3 percent.
Swedish telecoms gear maker Ericsson AB was up 1.3 percent after it agreed to buy US-based wireless networking company CradlePoint Inc in a US$1.1 billion deal.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure