LONDON, Sept 9 — European shares bounced back a bit today after steep declines in the previous session, although sentiment remained fragile after AstraZeneca suspended global trials of its Covid-19 vaccine.
AstraZeneca Plc shares fell 0.5 per cent as it also paused large late-stage trials of its experimental vaccine due to an unexplained illness in a study participant.
The halt in the AstraZeneca vaccine trial comes as a blow to global economic confidence, noted global strategist, Michael Every at Rabobank.
“Halting trials of the ‘Oxford’ virus vaccine after a test subject suffered an unexplained serious illness is standard procedure, but is going to generate concern.”
The pan-European STOXX 600 index rose 0.8 per cent, with sub-indexes of sectors hit most by the pandemic lagging. Travel and leisure stocks fell 1.5 per cent, while autos dropped 0.6 per cent.
Defensive plays such as utilities, telecoms and healthcare on the other hand, rose more than one per cent.
British airline easyJet tumbled 4.6 per cent, the most on the sub-index and a day after it reduced its flying schedule as frequent changes in government restrictions on travel hit demand.
Airlines Ryanair, IAG and cruise operator Carnival fell between 2.6 per cent and four per cent.
Moves in the STOXX 600 index have remained stuck in a tight range since June. Investors are bracing for the European Central Bank’s (ECB) policy meeting tomorrow, which could act as the next catalyst.
Analysts are not expecting any surprises with regards to changes in rate policy, focusing more on the central bank’s inflation outlook and commentary on the euro’s recent strength.
“Key focus would be on Christine Lagarde’s press conference and whether she echoes her ECB colleagues’ concerns of a rising euro and how that could weigh on price pressures, while at the same time a stronger euro may result in the EU’s exports becoming less competitive,” said analysts at Maybank.
Investors were closely following developments around Britain’s plan for a life outside the European Union as the UK published legislation, a government minister acknowledged would break international law in a “limited way” and which could sour trade talks.
Expectations for third quarter STOXX 600 earnings have worsened as shown by the latest data from Refinitiv. Profits are expected to fall 39.2 per cent for the 600 companies listed on the pan-European index, against 37.9 per cent a week earlier. — Reuters
