Europe Points Lower As Second Wave Fears Increase

European bourses are pointing to a weaker start as fears of rising coronavirus cases drag on sentiment.

Charts (5)

European bourses are pointing to a weaker start as fears of rising coronavirus cases drag on sentiment. Although low volumes suggest weak conviction.

Germany has seen its R rate jump to 2.88 in just four days, up from, 1.79. A number over 1 indicates that the spread of the virus is increasing as lockdown measures are eased. Even though the number of cases in Germany is low, the rise is unnerving. The markets will be watching developments closely here. Germany has been relatively successfully in keeping deaths low and reducing the spread quickly in the first wave, investors will need to this second wave nipped in the bud to boost optimism that a second wave won’t be as devastating the first. 

Meanwhile, in the US states such as California and Florida are still seeing the number of cases rise. Apple announced that it will be shutting 11 stores owing to rising cases in some states adding to investor woes. On a positive, the recent outbreak in Beijing appears to be fading.

UK to reduce social distancing rules
What is becoming increasingly clear is that any covid-19 recovery will be far from a straight line. Hopes of a V-shaped recovery to be tested further this week as the UK is set to reduce its social distancing rules down to one meter in an attempt to boost the prospects of survival for shops, bars and restaurants as they reopen. Chancellor Rishi Sunak has also hinted towards a reduction in VAT to get the UK spending again.

Spain reopens for tourism
Spain has removed its state of emergency, reopening its borders to allow summer tourism to restart. The next few weeks will be crucial as investors keep a close eye on coronavirus cases to see whether this big step forward will also mean a big increase in cases. 
Whilst localised flare ups in coronavirus cases are likely to happen, the speed and effectiveness of dealing with them will be paramount.

Survey data in focus
Today, the UK economic calendar is fairly empty with CBI business trends in focus. European consumer confidence could also attract some attention. This data should provide a sense of how quickly sentiment is recovering as economies reopen. This is key for a recovery in domestic demand. Expectations are for a slow increase in confidence in June to -15, up from -18.8
Looking ahead a barrage of PMI data from UK, Eurozone and the US will provide further clues as to the health of the economic recovery. 

FTSE Chart

More from FTSE 100


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.