European stocks stall as virus cases rebound

Covid-19 has battered various sectors, the travel industry in particular. — AFP pic
Covid-19 has battered various sectors, the travel industry in particular. — AFP pic

LONDON, June 29 — Europe’s stock markets edged higher today as investors balanced easing global lockdowns against news of surging coronavirus infections in several countries including the United States.

London advanced as dealers positioned themselves before British Prime Minister Boris Johnson’s announcement this week on reopening up the UK’s shattered travel sector, with share price gains for holiday company TUI and airline EasyJet.

BP’s share price jumped 2.7 per cent to 313 pence after the British energy major, hit hard by the coronavirus pandemic slashing demand for oil, unveiled the sale of its petrochemical business to privately-owned rival Ineos for US$5.0 billion (RM21.4 billion).

However Asian equity markets tanked Monday, tracking Friday’s steep Wall Street losses, as soaring Covid-19 infections prompted US officials to reimpose containment measures that have fanned worries about the economic recovery.

“European markets are treading water as we kick-off a new week, with the positive implications of easing lockdown measures weighed up against surging Covid-19 cases throughout the US,” said Joshua Mahony, senior market analyst at online trading firm IG.

“Nevertheless, while the US experience does provide a warning sign of what could be around the corner, investors seem happy to jump aboard travel stocks such as TUI and EasyJet ahead of a surge in European travel for the month ahead.

“With Johnson set to announce a host of countries within which UK travellers can visit without the need of a quarantine on return, we are seeing some optimism that demand could pick up as the government essentially provides the go-ahead for summer holiday plans.”

Signs of second wave 

However, after weeks of lockdown easing across the planet, there are signs of a second wave of infections in key cities, jolting the investor confidence that has helped power a surge in equities from their March trough.

Bars in Los Angeles and six other counties in California—with a joint population of more than 13 million people—were ordered to close up again, just over a week after reopening, while San Francisco is stalling its easing measures.

There has also been a sharp pick-up in Texas and Florida, two of the most populous American states and home to a combined 50 million people.

Other big states including Arizona and Georgia have also seen large jumps in cases.

Elsewhere, China has imposed a strict lockdown on nearly half a million people in a province surrounding Beijing to contain a fresh cluster, with a city official calling the situation “severe and complicated”.

Oil takes hit 

Concerns about the impact on demand from the reimposition of some containment measures also weighed on oil markets, with both main contracts down more than one percent, having lost around three percent last week.

And analysts said the commodity would have suffered heavier losses were it not for massive output cuts by major producers.

US fracking firm Chesapeake Energy has meanwhile filed for bankruptcy, entering restructuring to erase US$7 billion in debt as the cost-intensive sector buckles under collapsing oil prices and weak demand arising from the coronavirus pandemic.

The Oklahoma-based oil and gas producer—once a leader in the US shale boom that has transformed global energy markets—said the move was necessary despite efforts to improve performance. — AFP

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