Travel stocks push European shares lower
On Monday European shares were negative, led by travel stocks, on concerns that the highly contagious Delta variant could hinder travel demand and slow the current global economic improvement.
The pan-European STOXX 600 index dropped 1.4%, reaching its lowest in almost two weeks. The German DAX fell 1.1% and France’s CAC 40 lost 1.2%. UK’s FTSE 100 dropped by 1.3% as an increase in virus cases overshadowed optimism about England’s reopening.
Travel and leisure stocks fell 2.3%. Britain’s government said on Friday it was canceling a planned relaxation of COVID-19 quarantine rules for travellers from France. UK-listed shares of cruise operator Carnival Plc, airlines easyJet and British Airways-owner IAG all dropped between 4% and 6.5% in early trading.
Risk-aversion was widespread as an increase in coronavirus cases around the world pushed down bond yields and left stocks confronting their longest losing streak since the pandemic first hit global markets 18 months ago.
London’s FTSE dropped 1.3% as England got rid of COVID-19 restrictions even though over 48,000 new cases were registered in Britain on Sunday. Britain’s health minister has also tested positive for the virus.
Asia had seen Japan’s Nikkei and Hong Kong’s Hang Seng fall1.3% overnight too. Cases hit an 11-month high at the weekend in Singapore. Thailand had its highest single-day increase since the pandemic began and Sydney’s construction workers were told to down tools after cases rose there as well.
Oil prices dropped more than 2% after the OPEC group of producing nations beat a recent argument and agreed to increase production in a quickly arranged meeting on Sunday. Brent crude lost $1.70 at a fiveweek low of $71.85 a barrel. U.S. crude fell a similar amount to $70.59 a barrel.
Global economic growth is starting to show signs of fatigue as many countries, particularly in Asia, struggle to reduce the highly contagious Delta variant of the novel coronavirus and have been forced into some form of lockdown. Investors are also worried about the spectre of elevated inflation, which the market has long feared.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.