- The FTSE 100 and DAX 30 indices opened lower this morning on the rising number of new COVID-19 cases
- U.S. indices extending losses on fading hopes of a new Congress-approved stimulus package
- “Any further fiscal support will likely have to wait until 2021,” Goldman Sachs analysts said
Indices in the United States and Europe slipped on Thursday as investors have mostly given up hope on the rising number of daily coronavirus cases across the continent, as well as fading hopes of a new Congress-approved stimulus package.
FTSE 100 down 0.2%
The FTSE index trades around 0.2% lower, after erasing most of the morning’s losses. The aviation industry also moved down, with Rolls-Royce (LON: RR.), International Airlines Group (LON: IAG), and Airbus (EPA: AIR) all being in the red.
Cineworld (LON: CINE) trades nearly 15% lower as it struggles to cope with coronavirus consequences. On the other hand, Pets at Home (LON: PETS) stock is buoyed by strong sales momentum.
The U.K. Chancellor Rishi Sunak is supposed to introduce measures to replace the ending job furlough program.
DAX Index recovers
Similar to its British counterpart, the DAX 30 index slipped lower at the open before recovering to trade at 12670, or 0.22% in the green. Continental AG (ETR: CONG) leads the way with gains of over 3% on the day.
The Ifo business climate index advanced for a fifth month, according to data published today that was almost in line with analysts’ estimates.
DJIA extends losses
In the United States, the Dow Jones Industrial Average (DJIA) lost 525 points on Wednesday, while stock futures retreated today. Goldman Sachs analysts halved their U.S. growth estimates for the Q4 to 3% from 6%.
“We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution. This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021,” analysts said.
Ajay Rajadhyaksha, a U.S. strategist at the British bank Barclays, said to clients that “the valuation gap between growth and value equities is now at such an extreme that value stocks offer positive asymmetry on the next leg of the recovery, which should help European and other non-U.S. indices.”
European and the U.S. indices retreated today as investors are losing hope in the new stimulus package from the U.S. Congress and due to a hike in new Covid-19 cases.