US AND EUROPE MARKET PAUSED OR INCLINED TOWARDS CORRECTION
US futures wobble on Wednesday as investors get more concerned about a slowing economy amid the spread of the coronavirus delta variant. Renewed mask mandates, travel restrictions, event cancellations and delayed office reopening are weighing on the economy, as the latest payrolls report showed. At the same time, traders are increasingly betting on the potential for a delay in Fed's tapering plans as many consider the economy is still not strong enough for a reduction in stimulus.
European stocks fell more than 1% Wednesday, extending Tuesday's losses, amid lingering concerns about the delta Covid variant’s impact on global growth and as investors remain cautious ahead of the European Central Bank's policy meeting on Thursday at which officials will be debating the PEPP bond-buying pace. PEPP purchases are seen falling possibly as low as €60 billion a month from the current €80 billion, before a further fall early next year and the scheme's end in March.
The FTSE 100 fell below the 7,100 mark on Wednesday as growth concerns are weighing and as investors await the European Central Bank's policy meeting on Thursday where the central bank could unveil plans to slow down its massive bond purchases. On the corporate front, UK tech firm Smiths Group is to sell its medical unit to UICU Medical for $2.4 billion, while supermarket Morrisons is talking to its private equity suitors and the UK Takeover Panel regarding an auction to settle its future ownership. Elsewhere, investors continued to digest Prime Minister Boris Johnson's plans to raise taxes on workers, employers and some investors to pay for social care costs and the NHS.
The CAC 40 slipped to near 3-week lows on Wednesday, amid a bearish global market sentiment, as investors took cautious steps ahead of the ECB meeting, after its Chinese counterpart ruled out increasing stimuli to boost economic growth. At the same time, growth expectations remained prudent due to the risk posed by the pandemic, which the WHO says will become endemic. French securities were mostly bearish with the exception of industrial group Bouygues, which has confirmed the submission of a non-binding offer to Engie for the acquisition of its subsidiary Equans. Meanwhile, Stellantis slid more than 2% after Chinese auto giant Dongfeng hived off a 1.2% stake in the Franco-Italian auto group.
The FTSE MIB extended losses on Wednesday, slipping to its lowest level since August 5th, amid growing concerns about the pace of the economic recovery. At the same time caution prevailed among market participants on the eve of the ECB monetary policy meeting, after its Chinese counterpart ruled out increasing stimuli to boost economic growth. On the data front, retail sales in Italy were 0.4% lower in July over June, pointing to the slowest retail activity since last January, mainly due to the non-food sector. On the earnings front, Exor shed more than 1% after posting the half-year 2021 results, which saw €838 million in consolidated profits, compared to a consolidated loss of €1,318 million in the same period of 2020.
The IBEX 35 fell more than 1% to around 8,786 on Wednesday, its lowest since August 3rd, in line with its European peers, amid mounting worries over the slowing pace of the global economic recovery due to the impact of the Covid-19 Delta variant. At the same time, investors remain cautious ahead of the European Central Bank's policy meeting on Thursday at which officials should start debating how to phase out its massive bond-buying program. Among single stocks, Siemens Gamesa plunged more than 6%, after JP Morgan downgraded the company to 'neutral' from 'overweight' and cut its target price to 26 euros from 30 euros. In other corporate news, ArcelorMittal has received a German state funding pledge for half the 110 million euros it plans to invest in a demonstration steel plant that will use hydrogen produced with renewable electricity.
