Tech sell-off weighs on Europe as virus fears mount; FTSE 100 outperforms
European stocks were hit by a selloff in technology shares on Tuesday, as U.S. peers slumped on fears of new coronavirus restrictions, while London blue-chips outperformed on a boost for the telecoms and energy sectors.
The pan-European STOXX 600 index fell 0.8% after two days of gains, with technology stocks .SX8P posting their biggest drop in over a month, down 2.6%.
Shares in SAP SE (SAPG.DE), ASML Holding NV (ASML.AS), Prosus NV (PRX.AS) and Infineon Technologies AG (IFXGn.DE) fell between 2.6% and 5%, tracking continued declines in U.S. tech majors on worries that another lockdown in California to contain a surge of coronavirus infections may slow a U.S. economic recovery.
“California is a tech haven, so this is going to have a disproportionate effect on tech stocks,” said Connor Campbell, markets analyst at SpreadEx.
Globally, a tally showed the number of coronavirus infections hit 13 million on Monday, climbing by a million in just five days.
Travel & leisure .SXTP stocks, one of the pandemic’s worst casualties, fell 2.7% for the worst session in three weeks.
London’s FTSE 100 .FTSE cut losses to end slightly higher as oil stocks cheered recovering crude prices. BP (BP.L) rose 2.6%.
Sources said BP delivered 3 million barrels of Iraqi oil to the Shanghai International Energy Exchange this month, becoming the first major global trader to make a physical delivery since China launched the futures market in 2018.
Telecom operators BT Group (BT.L) and Vodafone (VOD.L) rose after Prime Minister Boris Johnson ordered equipment from Chinese telecom equipment maker Huawei be banned from Britain’s 5G network by 2027.
Meanwhile, data on Tuesday showed euro zone industry output recovered from record declines, but was lower than expected. Separately, Germany’s ZEW research institute, said the outlook for Europe’s largest economy remains largely unchanged in July versus the previous month.
“The latest ZEW index paints a good picture of how the recovery of the German recovery could evolve… (it) adds to the evidence of a levelling off in the German economy,” Carsten Brzeski, chief economist, eurozone at ING.
European banks .SX7P cut a chunk of their losses after largest U.S. lender JPMorgan Chase & Co (JPM.N) posted a smaller-than-expected 51% drop in second-quarter profit.
Healthcare stocks were among the biggest drags, with Roche (ROG.S) down 1.6%. The Swiss drugmaker struck a $1.7 billion cancer drug pact with Blueprint Medicines (BPMC.O), which includes rights to the U.S. company’s lung cancer drug pralsetinib.