European stocks slip further after biggest global sell-off since June

European markets slipped, while Wall Street opened higher, a day after concerns about the second wave of the pandemic sent global stocks tumbling by the most since June.

Europe’s main bourses gave up morning gains to trade lower by midday on Thursday. Both the region-wide Stoxx Europe 600 and London’s FTSE 100 indices fell 0.4 per cent, while Frankfurt’s Xetra Dax was 0.2 per cent lower.

In the US, the S&P 500 index traded 0.4 per cent higher in early dealings, after data showed the US economy rebounded in the third quarter and jobless claims dropped more than expected last week.

The calmer session came after MSCI’s broad index of global developed and emerging market stocks dropped 2.9 per cent on Wednesday. Wall Street’s S&P 500 dropped 3.5 per cent, its biggest one-day loss since June.

The dollar climbed 0.3 per cent against a basket of peers after data showed US economic output rose 7.4 per cent in the July to September period compared with the previous quarter. It shrunk 9 per cent in the second quarter.

The pace of US growth was “faster than anticipated”, said Richard Flynn, UK managing director at Charles Schwab, “but activity has some way to go before returning to its pre-Covid peak”.

Initial US jobless claims fell to 751,000 last week, below the 775,000 claims forecast by economist, although the number remains at historically high levels, as the country faces a fresh rise in coronavirus cases.

The euro fell against the dollar after the European Central Bank gave a strong hint that it will respond to the worsening eurozone economic outlook in December with new stimulus measures. The single currency slipped 0.4 per cent to $1.1693, its lowest level in more than a week. However, it was flat against the UK pound at 90.5p.

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Oil headed for its worst week since April, driven by concerns that stricter Covid-19 measures will hobble demand for fuel. Brent crude slipped a further 5.1 per cent to $37.11 a barrel on Thursday, taking the global benchmark’s fall for the week to more than 10 per cent.

Column chart of Brent crude ($ per barrel) showing Oil heading for worst week since April

For the oil market “demand concerns are likely to be chief among the bearish factors at play at present”, said analysts at JBC Energy.

Supply is also rising following the end of an oil export embargo in Libya, leading many analysts to bet that Opec and its allies will have to delay plans to add back oil production in January.

“One can only wonder how long until Opec+ announces the rollover of the current output ceiling,” said Tamas Varga at oil brokerage PVM in London.

Additional reporting by David Sheppard in London



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