European stocks rise, pushing aside second-wave virus fears

Updated May 16, 2020

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The pound weakened against the euro as UK and EU negotiators reported little progress in post-Brexit trade talks.
— AFP/File
The pound weakened against the euro as UK and EU negotiators reported little progress in post-Brexit trade talks. — AFP/File

LONDON: Europe’s stock markets were mostly firmer on Friday as investors focused more on easing lockdowns than fears of another coronavirus wave, while Frankfurt shrugged off data showing that Germany has entered recession.

In foreign exchange markets, the pound weakened against the euro as UK and EU negotiators reported little progress in post-Brexit trade talks.

Decoupling from a more pessimistic mood across the Atlantic, equity investors in Europe went fishing for bargains a day after stocks tanked on news of spiking jobless claims in the United States.

“After two down days for the markets, the week is ending on a more positive note for equities,” said AJ Bell investment director Russ Mould.

On Wall Street however, the Dow Jones index came off to a weaker start after Thursday’s late rally, with the US trend pushing European markets off their morning highs.

‘Terrible note’

“Wall Street is closing out the week on a terrible note as trade concerns grow, and horrid data encouraged investors to head for the sidelines,” said Edward Moya at OANDA.

The coronavirus pandemic has tipped Germany into a recession, official data showed Friday, with Europe’s top economy suffering its steepest quarterly contraction in more than a decade as lockdown measures began to bite.

The German economy shrank by 2.2 per cent in the first quarter of 2020, federal statistics agency Destatis said, calling the quarter-on-quarter decline “the worst since the global financial crisis” in 2009.

The agency also revised its gross domestic product (GDP) figure for the final quarter of 2019 from zero growth to a contraction of 0.1pc. That means Germany has experienced two consecutive quarters of decline, meeting the technical definition of a recession.

Oil prices rose on demand optimism as people slowly emerge from lockdowns, while producers push ahead with massive output cuts.

Published in Dawn, May 16th, 2020