Europe close: Stocks finish in the red as Austria and Germany impose fresh Covid-19 restrictions
By Alexander Bueso
Date: Friday 19 Nov 2021
(Sharecast News) - European shares finished lower on Friday following another early feint higher, as rising Covid case numbers and lockdowns in the region dampened investor sentiment.
"Austria's lockdown decision has revived the spectre of weaker economic growth, and as a result global stocks are generally lower on the final day of the week," said IG chief market analyst, Chris Beauchamp.
"European markets are mostly down in unison, as investors look to take profits on indices like the Dax and CAC, which both hit highs just yesterday, while the Channel is no barrier to losses on the FTSE 100, which has fallen further to put a resoundingly poor finish on an already dismal weak for the premier UK index."
The pan-European Stoxx 600 index was down 0.33% at 486.08, alongside a 0.38% dip for Germany's Dax to 16,159.97 while Spain's Ibex 35 gave back 1.68% to 8,753.20.
Euro/dollar, front month Brent crude oil futures and longer-term euro area government bond yields were all lower alongside.
On a brighter note, in the UK, retail sales increased 0.8% month-on-month in October, slightly exceeding the 0.5% expected by economists. Excluding fuel, sales grew by 1.6% on the month against a 0.6% forecast, as the country faced a spike in energy prices.
But it was Central Europe that was in focus at the end of the week, after Austria said that it would impose a full 20-day national lockdown from Monday as case numbers started to rise and impose inoculations. The news hit airlines looking for a boost in passenger numbers over the coming holiday period with British Airways owner IAG, easyJet and Lufthansa all flying lower.
The Stoxx 600 Travel&Leisure sector sub-index dropped 1.56% on the back of the news, although it was Oil&Gas that fared worst, retreating by 2.53%.
A separate sub-index meanwhile fell by 2.27%.
Further north, in Germany, Chancellor Angela Merkel announced restrictions on for the unvaccinated as a "very worrying" fourth wave of Covid-19 hit the country. Health Minister Jens Spahn said the coronavirus situation in the country was so grave that a lockdown, including for people who have been vaccinated, cannot be ruled out.
"With Austrian cases surging over 400% in the last month alone, they do stand out as a particularly bad case when set against many of their European peers," said IG analyst Joshua Mahony.
"However, with Covid cases turning upwards across the likes of Germany, France, and Portugal, there is a fear that today's announcement is indicative of where other European nations could find themselves in 2-3 weeks' time. Energy markets have taken a hit off the back of the Austrian lockdown announcement, with the demand outlook undoubtedly worth adjusting if we see a fresh bout of lockdowns."
In equity news, UK online grocery delivery service and warehouse system designer Ocado topped the Stoxx 600 throughout much of the session after a Deutsche Bank note suggested 50% shareholder Marks & Spencer could be mulling a potential buyout.
"Cash flow is no longer being squandered on an unsustainable dividend but saved to recover the investment grade credit rating that may be required to buy out Ocado," DB said in a research note.
Anglo-French home improvement retailer Kingfisher fell 4% as it posted a 2.4% slide in third-quarter sales but said the final quarter of the year was off to a strong start.
Polish parcel locker company InPost also jumped by over 7% after two successive sessions of steep declines.
French luxury group Hermes was close behind, adding 5% after talks that it may be added to the Eurostoxx 50 index during a December review.
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