European stocks fall
European shares fell on Tuesday as declines in cyclical stocks and UK’s British American Tobacco threw a spanner into a rally driven by optimism over a global recovery from the coronavirus crisis.
The pan-European STOXX 600 index fell 1.3%, with eurozone banks down 5.6% after a six-day run of gains. Shares in oil majors Royal Dutch Shell, BP and Total fell between 3.2% and 4.7% as crude prices pulled back on the spectre of persistent oversupply.
Other sectors considered more economically sensitive such as automakers, travel and leisure and insurers, which led a market recovery in the recent weeks, fell between 3.6% and 4%. Dragging London’s FTSE 100 lower, BAT slid 3.5% after it cut annual targets, citing a demand hit from stricter lockdown measures in key emerging markets. Meanwhile, investors also awaited the Federal Reserve’s two-day monetary policy meeting, set to conclude on Wednesday.
The World Bank said on Monday the coronavirus crisis will cause global economic output to contract by 5.2% in 2020, warning that its forecasts would be revised downward if uncertainty persists.
However, a surprise recovery in U.S. jobs data and unprecedented stimulus from central banks have helped the European benchmark rise to about 14% below its record high, while Wall Street’s tech-heavy Nasdaq confirmed a return to bull market on Monday. Healthcare stocks were the sole gainers, rising 1.2%. Among individual stocks, Telefonica Deutschland dropped 4.5% as it signed a deal to sell thousands of phone masts for 1.5 billion euros to Telxius Telecom.
Asian stocks extended their winning streak for the ninth consecutive session on Tuesday and oil prices rose as the lifting of coronavirus lockdowns in many countries fed investor hopes of a relatively quick global economic recovery.
MSCI’s broadest index of AsiaPacific shares outside of Japan advanced for a ninth straight session for its longest winning streak since early 2018. It was last up 1% at a three-month peak and has risen 35% from 4-year lows struck in mid-March.