European shares dip on dismal economic data, but secure 0.2% in weekly gains



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European shares dip on dismal economic data, but secure 0.2% in weekly gains

A basket of European bourses edged lower on Friday after the London-based British-American market mapping company IHS Markit’s survey data had unveiled that the eurozone economy had been met with a sheer contraction in January as an intransigent lockdown measure inclined by a majority of leading euro zone economies had shuttered down several businesses in the bloc.

Nonetheless, despite Friday’s tumble the regional pan-European STOXX 600, which had hit an eleven-month peak earlier this week over optimisms of a larger pandemic stimulus package from the Biden Administration, a successful post-Brexit trade deal alongside hopes of a faster economic rebound, had secured a weekly percentage gain of 0.2 per cent, however, had wrapped up a lacklustre session down by 0.6 per cent.

In point of fact, a double whammy of a deluge of dismal economic data released earlier in the day alongside a stiffer lockdown measure that grievously hurt investors’ sentiments, had dictated the downfalls in the day’s European money markets, while IHS Markit’s flash composite euro zone PMI (Purchasing Managers’ Index) had been hit with a hefty whiplash, fell further below a benchmark 50-mark that separates growth from contraction.

Concomitantly, IHS Markit’s survey data on euro zone composite PMI fell to 47.5 in January, down from a reading of 49.1 registered in December, pouring fresh scorns on more economically-sensitive shares.

European shares slumped after downbeat PMI data

Apart from that, the bloc’s vast service industry had been hit hard with hospitality and tourism industry bearing the heaviest brunt with a plunge of 2.5 per cent amid a sharp lockdown measure in Europe, while UK alongside the bloc’s first- and second-largest economies, Germany and France respectively, had inclined a nationwide lockdown, adding further strains to investors’ morale.

Citing statistics, in the day’s European market closing bell, the regional pan-European STOXX 600 lost 0.6 per cent, but reported a weekly rise of 0.2 per cent as beforementioned, while London’s blue-chip index shed 0.30 per cent to 6,696.07, French CAC 40 curbed out 0.56 per cent to 5,559.57 and Frankfurt’s DAX dwindled 0.24 per cent to 13,874.

Elsewhere in the Europe, Madrid’s benchmark IBEX 35 muzzled as much as 1.06 per cent to 8,036.40, while leading the losses in the region, Italy’s FTSE MIB dipped 1.52 per cent to 22,088.36 after the coalition Government of Italy had backed a snap election on Friday, mostly aimed at unwinding a potential political gridlock as PM Conte had failed to secure a majority in parliament in a vote of confidence earlier this week.

Meanwhile, addressing to investors’ uncertainties on whether they should hold forth a “buy” position amid a pandemic resurgence which has been wreaking havocs on global economic environment since late-2020, a Chief European equity strategist at Morgan Stanley, Graham Secker said, “There is quite a big discussion in the market on whether the consensus is too bullish, or if we need to have a pullback.

I think this is more about the fact the markets had a strong run over the past few months. Maybe it gives people an excuse for some profit-taking. While the long-term narrative is intact, the market tends to give the benefit of doubt.