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European shares set for monthly loss on virus, U.S. election worries

(Reuters) – European stocks slipped on Wednesday as surging coronavirus cases and a chaotic debate that highlighted risks from the U.S. presidential election sapped risk appetite at the end of a tumultuous month for financial markets.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 28, 2020. REUTERS/Staff

The pan-European STOXX 600 index .STOXX fell 0.4% tracking Wall Street futures lower, after a messy face-off between U.S. President Donald Trump and Democratic rival Joe Biden overnight stoked caution among investors.

Britain reported 7,143 new coronavirus cases on Tuesday, the highest single figure to date, and Germany looked set to tighten COVID-19 restrictions in an effort to contain the spread of the virus over autumn and winter.

Travel & leisure .SXTP stocks fell 1.8%, the most among all the sectors, while tech shares .SXTP also lost ground with Infineon Technologies IFXGn.DE and STMicro STM.PA down over 1% following U.S. chipmaker Micron Technology’s MU.O downbeat revenue forecast.

“It was an angry exchange of words, but not much came out that might make investors change their mind one way or the other,” said Simona Gambarini, markets economist at Capital Economics, referring to the U.S. presidential debate.

“A much bigger factor affecting markets at the moment is a second wave of virus cases in Europe and rising numbers in the U.S.,” Gambarini added.

Defensive sectors, considered more stable during times of economic uncertainty, such as utilities .SX3P, real estate .SX86P and food & beverage .SX3P were among the few gainers.

The STOXX 600, while on course to end the third quarter flat, is set to close September with a 1.7% drop, its biggest since a near 15% decline in March, when pandemic-driven selling in markets hit a peak.

Dealmaking activity also triggered big moves in stocks.

Dutch specialty chemicals company DSM DSMN.AS rose 3.6% after Germany’s Covestro 1COV.DE said it would buy its resins and functional materials unit for about 1.6 billion euros ($1.88 billion). Covestro 1COV.DE fell 6.3%.

TP ICAP TCAPI.L, the world’s biggest inter-dealer broker, slumped 12.1% after revealing it was in advanced talks to buy electronic trading network Liquidnet Holdings for $600 million to $700 million.

French waste and water management company Suez SA SEVI.PA jumped 7.1% after bigger rival Veolia VIE.PA raised its offer to buy a 29.9% stake in the company.

Helping oil stocks .SXEP defy weakness among growth-sensitive sectors, Royal Dutch Shell RDSa.L rose 1.1% after revealing plans to cut up to 10% of its workforce.

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