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Europe close: Stocks finish lower but off worst levels

By Alexander Bueso

Date: Thursday 24 Sep 2020

Europe close: Stocks finish lower but off worst levels

(Sharecast News) - European shares finished slightly lower on Thursday but off their worst levels of the session, weighed down by weakness on Wall Street following the release of a worse than expected reading for secondary jobless claims and on fading hopes for further US stimulus spending.
Yet some equity strategists were sounding a sanguine note.

"The world economy rebounded in Q3, led by the US, and a COVID vaccine now seems likely by year-end," said analysts at Barclays Research.

"While the US presidential election is a near-term downside risk, we are overweight global equities over fixed income, given the recovery, supportive central banks, and potential vaccine approval."

The pan-European Stoxx 600 index was down 1.02% to 355.85, although fears that tougher coronavirus restrictions were almost inevitable in the UK pushed London's FTSE 100 1.3% lower to 5,822.78.

Offsetting those concerns, investors were also awaiting details of a new jobs support package from Finance Minister Rishi Sunak.

In the Eurozone, France's CAC-40 also fared poorly, falling by 0.83% to 4,762.62, with Germany's DAX lower by 0.29% at 12,606.57 even after PMI readings on Wednesday showed the services sector in both countries has started to contract once again in September.

Earlier, European stockmakerts had dropped sharply, but later particially recovered, due to worries that the US Congress would not agree extra fiscal stimulus to counter the ongoing Covid-19 crisis, meaning there may be no further support until 2021.

In London, Sunak on Wednesday cancelled the Budget scheduled for the following month but did announce a new support package to replace the furlough scheme that finishes at the end of October.

Speculation centred on wage subsidies and targeted aid for exposed sectors, such as leisure and hospitality, which have been hit by fresh curbs on trading hours.

In equity markets, engine maker Rolls-Royce and GKN owner Melrose Industries were under the cosh again amid concerns about the impact of Covid-19 on the airline industry.

British Airways and Iberia owner IAG, Airbus, InterContinental Hotels and easyJet were also trading lower.

Elsewhere, Smiths Group was in the red after it posted a drop in annual profit but reinstated its dividend and said business was stabilising.

Cineworld sank after saying it swung to a loss in the first half after its cinemas were forced to close in March due to the pandemic and warned it would need to raise additional liquidity if its cinemas were shut again.

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