BUSINESS European stocks falter as 'summer lull' saps energy

BUSINESS

European stocks falter as 'summer lull' saps energy

AFP

20:02, July 09, 2020

European equities faltered Thursday in subdued trade amid a dearth of market-moving news, but Frankfurt won traction from earlier gains in Asia and overnight in New York.

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File photo: Agencies

"Markets are dealing with the summer lull ... but volume is lower, which is causing a lack of movement and some erratic moves," Scope Markets analyst James Hughes told AFP.

"There is a feeling of wait and see as earnings season in the United States begins next week, so markets are a little subdued."

London fell 0.7 percent at midday but Frankfurt stocks managed to jump 1.1 percent higher in early afternoon deals, while Paris flatlined.

"It looks like it will be a day of drift and indecision for markets, thanks to a light economic and corporate calendar," added IG analyst Chris Beauchamp.

"European markets have made (some) gains however, taking their cue from the broadly positive session for Asia overnight."

Asian equities rose following another record close on Wall Street as concerns about a new spike in coronavirus infections around the world were outweighed by optimism for the economic recovery.

The giant wall of money stumped up by governments and central banks was also providing crucial support to nervous equity traders, even as some countries reimposed certain containment measures.

Analysts expect the colossal cash back-up will likely continue to push asset prices higher.

In Asia, Shanghai rallied more than one percent as data showed a pick-up in inflation that indicates the world's number-two economy continues to improve.

Sydney won 0.6 percent after Wednesday's sharp drop as Australia's second-biggest city Melbourne imposed a fresh lockdown on five million residents to combat a new virus outbreak.

The easing of lockdowns and a healthy run of economic data have provided a boost to world markets in recent weeks -- with some up around 30-40 percent from March lows -- though the major driver has been the trillions of dollars in stimulus and cheap credit.

While there are hopes for the economic recovery, investors remain on edge about the spread of the coronavirus, which is surging across the US, forcing several states to close bars and restaurants again.

Measures are also being reimposed in Serbia, while France -- which had flattened its curve by a strict early lockdown -- said Wednesday it was girding for a possible surge in cases, leading its new prime minister to soothe fears by promising no new full shutdown.

Uncertainty about the outlook, along with an expectations that borrowing costs will remain anchored for some time, have sent haven investment gold soaring about a fifth this year and its price is now sitting above $1,800 for the first time since 2011.

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