European shares end 2020 in a slump as stiffer UK restriction, Brexit angsts weigh



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European shares end 2020 in a slump as stiffer UK restriction, Brexit angsts weigh

A basket of European bourses had rounded off a thin-volume trading session on Thursday in a downbeat tone, wrapping up 2020 in red inks as a stiffer pandemic restriction alongside prospects of a chaotic Brexit deal had taken a heavier toll on market participants’ morale throughout the year, while the regional pan-European STOXX 600 ended the year 3.7 per cent down, still only 7 per cent lower from its all-time highs.

Nonetheless, trading volume was light as beforementioned with a majority of European bourses closed except stock exchanges in London, Madrid and Paris.

European shares end 2020 in red inks

Aside from that, on an annualized basis, the regional pan-European STOXX 500 had reported a decline of 3.7 per cent last year, well off from its peers in Wall Street and Asia which had been anchoring near their record closing highs, nonetheless, STOXX 600 had been only 7 per cent down from its all-time closing highs as beforementioned.

If truth is to be told, a downward glide in a gauge of European indices was almost entirely prodded by uncertainties caused over the prospects of a chaotic Brexit trade deal, while a stiffer pandemic restriction in Europe following reveal of a new UK-variant of the pandemic-pathogen had significantly damaged risk-appetite, pouring cold water over a year-end Santa rally.

Still, the regional STOXX has rallied more than 50 per cent from its March lows, as expectations of a large-scale stimulus package from ECB (European Central Bank), kickstart of a pandemic vaccination campaign alongside growing prospects of a Brexit trade deal, had largely dictated the terms in a majority of European bourses.

Citing statisitcs, at the end of a holiday-shortened trading session, London’s FTSE 100 faltered 1.5 per cent and French CAC 40 curbed out 0.9 per cent, while Madrid’s benchmark IBEX 35 had closed out the last trading session of 2020 down by 1 per cent.

On the year, Frankfurt’s DAX winded up 3.5 per cent higher and Italy’s FTSE MIB had registered an annual drop of 5.4 per cent, while Spain’s IBEX had marked up its worst year since 2010, plunging as much as 15 per cent.

Meanwhile, citing possibilities of a cheerful 2021 for a swathe of European stock indices amid a negative interest rate, a senior market analyst at Oanda, Jeffrey Halley wrote in a client note, “Vaccines will inspire a global recovery, central banks will leave rates at zero even if inflation rises to fund exploding government deficits everywhere.

The search for yield in a zero percent world flooded with unlimited free money from the world’s central banks, means the K-shaped recovery, asset price inflation scenario seems a certainty.