Europe open: Shares lower on Covid woes
European shares opened the session in glum mood on Thursday as news that schools in New York were closing in response to a surge in coronavirus cases and a rise in deaths on the Continent hit sentiment.
The pan-European Stoxx 600 index was down 0.66% with the German DAX, French CAC 40 and UK FTSE 100 all off by similar levels. US futures indicated a slight gain at the opening on Wall Street.
“With infection and hospitalisation rates rising, and the risk that current lockdown restrictions either remain in place, or get extended into 2021, the probability that any economic damage will become permanent is only likely to increase," said CMC Markets analyst Michael Hewson.
"These risks then need to be offset by the longer-term benefits of a workable vaccine, which even if starting to get rolled out next year, could take up to two years to really make a difference.”
“What’s particularly notable about the rally in Europe this month has been the relative underperformance of the DAX, which has lagged behind the likes of the Spanish IBEX, Italian FTSE Mib, which are both up over 20% month to date, and the France CAC40 which is up over 18%.”
“This outperformance probably has more to do with the fact that the German benchmark has more or less pulled back its losses for the year, while the likes of France, Italy and Spain have seen their economies hit much harder as a result of the pandemic, and as a result are still well below the levels, they started the year with.”
B&Q owner Kingfisher fell even as it reported a strong rise in third-quarter sales as consumers spent the coronavirus lockdown improving their homes.
Richard Hunter, head of markets at Interactive Investor, noted that over the last year, the outperformance of the share price has been significant, with a rise of 43% compared to a decline of 13% for the wider FTSE 100.
"Quite apart from the challenges which may be yet to come, the strong performance has led to the question of whether the shares are now up with events, as evidenced by some initial profit taking in early trade, such that the market consensus of the shares remains at a hold," he said.
In corporate news, Halma shares were up 3.6% after the safety equipment maker revised its full-year profit forecasts and lifted its interim dividend as order intake in the second half increased year-on-year.
Royal Mail stock jumped 5% despite swinging to a first-half loss in the first half as redundancy and Covid-19 costs more than offset higher revenue from booming parcel deliveries. The FTSE 250 group swung to a £20m operating loss in the six months to the end of September from a £61m profit a year earlier as revenue rose 9.8% to £5.7bn.
Shares in German forklift maker Kion topped the fallers, dropping 9% after the company said it would issue 11% more shares, at a price still to be determined.
ThyssenKrupp shares were down 6% as the German steelmaker said it would cut 7,400 jobs. The group also forecast a full year loss above €1bn.