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Stocks – Europe Weakens; UK GDP Data Weighs

imageStock Markets5 hours ago (Jul 14, 2020 03:48AM ET)

(C) Reuters.

By Peter Nurse – European stock markets traded sharply lower Tuesday, with weak U.K. economic data adding to concerns about the U.S. economy after California reversed much of its reopening in response to rising Covid-19 cases.

At 3:45 AM ET (0745 GMT), the DAX in Germany traded 1.8% lower and the U.K.’s FTSE index was down 1%. France was on holiday, celebrating Bastille Day.

The British economy grew 1.8% in May, a slight rebound after the deep fall caused by the coronavirus shutdown, but much weaker than the expansion of 5.5% widely expected.

“Despite the reopening of construction and manufacturing, the U.K.’s May GDP figures were underwhelming to say the least,” said analyst James Smith at ING in a research note. “Admittedly this is ‘old news’ now, and we should see a sharper rebound in June and July. But it does serve as a reminder that economic recovery from Covid-19 is going to be very protracted.”

In corporate news, HelloFresh (DE:HFGG) stock rose 4% as the German meal kit provider reported a surge in demand during the lockdown period.

Staying with food, U.K. online retailer Ocado (LON:OCDO) stock fell 3.7% despite reporting 27% growth in revenue and a narrower pretax loss in its first-half report. The stock has almost doubled in value since early March.

Elsewhere, industrial technology group Hexagon (ST:HEXAb) jumped 5% after forecasting second-quarter profit above market expectations.

The Covid-19 virus continues to wreak havoc. The total number of cases has climbed over 13 million cases globally, according to data from Johns Hopkins University, surging by a million in five days.

In the U.S., the most populous state California reshuttered bars and ordered restaurants and movie theaters to cease indoor operations. The move is the clearest signal yet that the world’s economic driver will have to reimpose economically damaging measures to bring the spread of the virus back under control.

Eyes will turn later in the session to the start of the U.S. earnings season, with big banks beginning to report second-quarter results. FactSet expects S&P 500 companies in general to report a 10% drop in revenue and a 45% drop in earnings in the quarter.

Oil prices weakened sharply on the Californian news, ahead of a meeting of OPEC’s technical staff on Tuesday and Wednesday. The meeting is expected to recommend the group and its allies, including Russia, stick with the current plan to taper its record supply cut of 9.7 million barrels per day to 7.7 million barrels a day from August.

American Petroleum Institute inventory data are also due later. At 3:45 AM ET, U.S. crude futures traded 2% lower at $39.30 a barrel, while Brent fell 1.6% to $42.03.

Elsewhere, gold futures fell 0.7% to $1,801.45/oz, while EUR/USD traded at 1.1333, down 0.1%.

Stocks – Europe Weakens; UK GDP Data Weighs

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