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European stocks lose steam after five-day rally

Stock MarketsNov 06, 2020 04:55AM ET
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© Reuters. The German share price index DAX graph at the stock exchange in Frankfurt

By Sruthi Shankar

(Reuters) - European stocks drifted lower on Friday after a strong rally this week as Italy and France posted a record number of coronavirus cases, while investors assessed the implications of a political gridlock in Washington on policy and stimulus.

The pan-European STOXX 600 index was down 0.8% after a five-day winning run that put the index on course for its best week since early June.

France, already under a national lockdown, set a daily record for COVID-19 cases for the second time in four days, and Italy also registered its highest ever daily tally on Thursday.

Travel & leisure stocks fell the most in response, with British airline easyJet (LON:EZJ) saying the recently announced lockdowns in England, Germany and France had forced it to scale back its already reduced flying schedule. Its shares declined 3.1%.

Technology and healthcare heavyweights also fell after strong gains this week.

Global stock markets rallied earlier this week as investors took the view that a divided U.S. Congress could delay major policy changes including tighter scrutiny on big American firms.

Democrat Joe Biden was moving closer to victory over Republican President Donald Trump in the race for White House, but the outcome was unclear with votes still being tallied and Trump falsely claiming the election was being "stolen" from him.

"Nagging doubts remain that the eventual outcome may well end up in the U.S. courts," Michael Hewson, chief market analyst at CMC Markets wrote in a morning note.

"For now, financial markets don't appear too concerned, however it would still seem prudent to take some money off the table as we head into the weekend."

Insurers got a boost after Germany's Allianz (DE:ALVG) reported an surprise 6% rise in third-quarter net profit.

A multi-billion dollar deal involving RSA, Canadian insurer Intact Financial and Danish insurer Tryg also lifted the sector.

Cartier jewellery maker Richemont jumped 9.3% as it saw a marked improvement in the second quarter thanks to online retail sales and China. Swatch Group (SIX:UHR) gained 1.4% in sympathy.

Deutsche Telekom (OTC:DTEGY), which owns a large stake in T-Mobile US (NASDAQ:TMUS) Inc, gained 2.7% after the U.S. operator added more phone subscribers than analysts had expected in the third quarter.

Comestics company Euro Cosmetic fell 4.9% in its stock market debut in the Milan exchange.

European stocks lose steam after five-day rally

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