LONDON – European stocks closed higher on Tuesday afternoon, trying to recover from a sharp sell-off in the previous session, despite concerns over a new strain of coronavirus in the UK
The pan-European Stoxx 600 provisionally closed 1.3% higher, with the German DAX and French CAC indices up around 1.3% and 1.6% respectively. Britain’s FTSE 100 closed 0.5% higher after initially falling. Banking stocks were among the main gainers, up 1.8%, with Barclays and Lloyds both climbing more than 3% to lead the sector. Elsewhere, technology rose 2.5% as European markets closed.
European markets came under heavy selling pressure on Monday amid concerns over a fast-spreading Covid mutation that was first identified in Britain. The new variant has forced the UK government to shut down London and other parts of south-east England and roll back household mixing over the Christmas holidays.
The variant, which scientists say is up to 70% more transmissible than previous strains in the UK, has also been identified in Italy, the Netherlands, Belgium, Denmark and Australia. This has caused several countries around the world to close their borders with Britain, disrupting travel and raising concerns about possible food shortages as the Brexit transition deadline approaches.
Meanwhile, the UK and EU remain deadlocked over post-Brexit trade relations as the December 31 deadline approaches, with differences over issues such as fisheries plaguing the talks. . British Prime Minister Boris Johnson said on Monday the country could still crumble without a deal.
“The position is unchanged, there are issues,” British Prime Minister Boris Johnson told reporters on Monday. “It is vital that everyone understands that the UK must be able to completely control its own laws and that we must also be able to control our own fisheries.”
“Still, the terms of the WTO would be more than satisfactory for the UK and we can certainly handle whatever difficulties come our way.”
The pound extended Monday’s losses on Tuesday, falling another 1% to around $1.33.
Official data showed Britain’s GDP rose by a record 16% in the third quarter, but that still failed to offset an 18.8% drop in the previous quarter, when much of the economy was closed.
On Wall Street, major U.S. stock indices opened around the flatline as a litany of Covid-related headlines capped an otherwise impressive rally in the fourth quarter.
The Dow Jones Industrial Average opened just below, down 40 points, or around 0.15%. Losses from Visa, Nike and 3M more than offset gains from Boeing, Apple and Salesforce.
The muted move came as Congress passed a coronavirus relief and government spending package late Monday. The bill now goes to President Donald Trump’s office.
Turning to individual stocks, UK supermarket stocks were under pressure on Tuesday after warnings that the disruption of international travel bans could lead to empty shelves. Sainsbury fell by 1.1% while Tesco and B&M European hovered around the flatline.