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European Stocks Struggling to Recover, New COVID-19 Strain Raises Concerns

January 8, 2021 by Sanya Dot

The European shares are attempting to recover after a sell-off that happened in the previous session. Luckily, on January 5, 2021, the shares closed higher despite a new coronavirus strain spreading in the United Kingdom.

Stock Markets Continue to Struggle

The pan-European Stoxx 600 closed 1.3% higher for the meantime, with DAX from Germany and CAC from France indexes increasing steadily around 1.3% and 1.6%, respectively.

Britain’s FTSE 100 closed 0.5% up after it failed initially. The banking stocks were some of the top gainers before the closing as Barclays got 1.8%, and Lloyds got 3% and led the sector. Meanwhile, technology increased by 2.5% as European markets closed.

On January 4, 20201, European markets came under pressure to sell amid concerns over a new COVID-19 mutation spreading fast in the United Kingdom, where it was first detected. The new variant forced the UK government to shut down London once again and other parts of southeast England and backtrack on the gatherings that happened over the holidays.

The new variant is 70% more transmissible than previous strains in the UK, according to scientists. This variant has also been identified in Netherlands, Italy, Denmark, Belgium, and Australia.

This spread has caused numerous countries to close their borders to the UK, thus canceling travel again and raising concerns over shortages of food and necessities.

Meanwhile, the UK and the EU remain in deadlock over their post-Brexit trade relations as the deadline approaches. Both parties go over their issues and clear disputes like fisheries plaguing talks.

British Prime Minister Boris Johnson said that the UK could still crash even without a deal.

Johnson told reporters that the position is unchanged and that “there are problems.” He said, “It’s vital that everybody understands that the U.K. has got to be able to control its own laws completely and also that we’ve got to be able to control our own fisheries.”

“It remains the case that WTO terms would be more than satisfactory for the U.K., and we can certainly cope with any difficulties that are thrown in our way.”

Sterling extended the losses, falling another 1% to around $1.33. The official data showed UK GDP increased by 16% in the third quarter of 2020, but that record number increase in number still did not make up for an 18.8% plummet in the previous quarter when the economy was shut down.

Major US stock indexes have opened around Wall Street’s flatline as numerous COVID-19-related headlines had prevented a supposed impressive fourth-quarter rally for 2020.

The Dow Jones Industrial Average opened low, as it was down for 40 points, which is about 0.15%. Losses in Nike, Visa, and 3M more than offset gains in Apple, Boeing, and Salesforce.

The muted move came as Congress passed a coronavirus relief and government spending package in December 2020. The COVID-19 relief bill has been passed to President Donald Trump, who is set to approve it before the transition of power on January 20, 2021.

As for the individual shares, British supermarket stocks were under pressure after they warned that international travel bans could eventually lead to food shortages. Sainsbury, one of the biggest supermarkets in the UK, fell by 1.1% while Tesco and B&M European had a flatline.

Filed Under: Financial Markets, Stocks

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