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European Stocks Lower; Chinese Clampdown, German Ifo Weigh

Stock MarketsJul 26, 2021 04:05AM ET
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By Peter Nurse - European stock markets weakened Monday, tracking losses in Asia after China's latest move against technology companies.

At 4:05 AM ET (0805 GMT), the DAX in Germany traded 0.7% lower, the CAC 40 in France fell 0.7% and the U.K.’s FTSE 100 dropped 0.6%.

European markets have had a negative handover from Asia Monday after the Chinese government continued its regulatory clampdown, releasing plans over the weekend to reform the $100 billion education sector, one of the country's most desired investment plays in recent years.  The spillover hit Asia-focused lenders HSBC (LON:HSBA) and Standard Chartered (LON:STAN) both lost over 2% in London. Prosus (OTC:PROSF), the holding company that owns a 28% stake in Chinese tech giant Tencent (OTC:TCEHY), fell 8.8% in Amsterdam

Also weighing was the disappointing release of the German Ifo business climate index for July, falling to 100.8 from a revised 101.7 the previous month, with the rising Covid cases weighing on sentiment.

Aside from this, the earnings season remains in full swing in Europe, with Ryanair (LON:RYA) stock 3.4% higher after Europe’s largest low-cost carrier raised its forecast for full-year traffic on strong summer bookings. Ryanair reported a smaller first-quarter net loss than expected but said it expected to make a profit in the current quarter.

That comes against a backdrop of data that suggest the latest wave of Covid-19 cases was close to peaking in the U.K. before it lifted restrictions on social distancing last week. The seven-day average for case numbers has fallen over 20% in the last week.

Koninklijke Philips (NYSE:PHG) stock fell 1% despite beating second-quarter earnings expectations as the pandemic continued to spur demand for hospital equipment. However, the Dutch health technology company booked an additional provision of 250 million euros as it needs to replace millions of sleep devices it recalled earlier in June.

Credit Suisse (SIX:CSGN) stock fell 0.6% after the Swiss banking giant announced it had reached an out-of-court settlement with a former employee over allegations of spying that led to the resignation of the Chief Executive Tidjane Thiam. 

Attention for much of this week is likely to turn further west, with the Federal Reserve, set to hold a two-day policy meeting, concluding on Wednesday, which could see the U.S. central bank announcing when it plans to start scaling back its hefty asset-purchasing program.

Additionally, this week is scheduled to be one of the busiest for earnings reports, with Tesla (NASDAQ:TSLA) due after the close Monday, and then the big tech giants Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) on Tuesday, while Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN) report later in the week.

Elsewhere, oil prices weakened Monday after eking out a small gain over the course of last week as investors assessed the outlook for demand amid a Covid-19 resurgence across much of the globe.

At 4:05 AM ET, U.S. crude futures traded 2% lower at $70.64 a barrel, while the Brent contract fell 1.7% to $72.16.

Additionally, gold futures rose 0.3% to $1,807.95/oz, while EUR/USD traded 0.1% higher at 1.1774.


European Stocks Lower; Chinese Clampdown, German Ifo Weigh

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