Markets

European stocks plunge, cautiousness prevails ahead of earnings season

Editor: Peter Nurse

investing. com – European stock markets fell on Monday. Investors started the new week cautiously.

DAX fell 0.2% CAC 40 0.7% and FTSE 100 fell 0.7%.

Europe’s major indices ended the week with big increases. But there are plenty of reasons for investors to be cautious this week.

European Central Bank (ECB) Leader Christine Lagarde said on Sunday that the central bank will update its guidance on cash incentives at the next meeting, pointing out that a new policy to support the European economy could be implemented in 2022 instead of the current “Pandemic Emergency Spending Programme”. This ignores the caveats from the Germany-led cluster of ECB members who want the massive stimulus to end as soon as possible. Since the first announcement last year, the ECB has doubled the scale of the program to €1.85 trillion ($2.2 trillion).

Last week, the ECB changed its stance on inflation – CPI rises above the 2% target will be tolerated if circumstances warrant.

Outside of Europe, the US will share inflation information for June this week. Fed Leader Jerome Powell will speak before Congress on Wednesday and Thursday, which could provide clues to the central bank’s ideas for bond cuts. China, where regulators have begun a new round of fire at local tech companies, will share its second-quarter GDP reading on Thursday.

On the other hand, while the number of Covid-19 cases continues to increase in much of Asia, the highest number of cases since mid-May has been recorded in the country due to the spread of the delta variant in parts of the USA with lower vaccination rates.

Back to the corporate segment: Germany’s chemicals giant BASF, an indicator for cyclical European shares, fell 0.3% despite increasing its full-year forecasts for the second time.

French IT consulting cluster Atos (PA: ATOS) lost 13% after cutting its full-year interest forecast. Plus500 (LON: PLUSP) shared a large drop in customer revenue for the first half of the year, and their share fell 0.3%.

Daily Mail and General Trust (LON: DMGOa) rose 5%. Its largest shareholder, the Rothermere family, said it was considering privatizing the British newspaper for £810m ($1.13 billion).

On the other hand, ASOS (LON: ASOS) rose 0.6%. US-based Nordstrom (NYSE: JWN announced that it has acquired a minority stake in four brands owned by the British online fashion home, which includes names that appeal to younger customers such as Topshop and Miss Selfridge.

Also this week, the quarterly profit period begins on Wall Street. Goldman Sachs (NYSE: GS), JPMorgan Chase (NYSE: JPM) and PepsiCo (NASDAQ: PEP) will report on Tuesday.

On the other hand, due to the increasing Covid-19 events around the world and the inability to reach an agreement on production levels in OPEC+, oil prices fell on Monday in an environment of uncertainty in the department.

However, prices are still high. U.S. agencies reported massive declines in crude oil inventories and an increase in fuel demand.

WTI futures fell 0.8% to $73.95 Brent contract traded at $74.88, down 0.9%.

on the other hand gold futures processes fell 0.3% to $1,804.55 EUR/USD traded at 1.1877, up 0.1%.

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