Strong GDP growth curbs losses in European markets

Stronger-than-expected GDP data curbed losses on European stock markets on Friday, but US stock futures pointed to a continued sell-off on Wall Street. European stocks had looked set for a fresh rout on Friday as infection rates and new lockdown curbs in France and Germany spooked investors, with futures contracts down sharply before markets opened.

But flash estimates for third-quarter GDP in leading European economies beat analysts’ expectations and quickly reined in losses on Friday morning. France, Italy, Germany and Spain all saw quarter-on-quarter growth beating analysts’ expectations in figures released on Friday morning in Europe. The FTSE 100 in London and The DAX in Frankfurt were both down around 0.1% in London by mid-morning after opening 0.7% and 1% lower respectively. The CAC 40 dropped by 0.8% at the open in Paris, but was up 0.4% by mid-morning as third-quarter GDP surged 18.2% quarter-on-quarter.

European markets had also seen a calmer day on Thursday after three days of declines. European Central Bank (ECB) policymakers signalled there was fresh stimulus to come in December. Its governing council had said it would “recalibrate its instruments, as appropriate, to respond to the unfolding situation.”

But president Christine Lagarde acknowledged the eurozone economy was “losing momentum more rapidly than expected,” and tighter restrictions were imposed in Germany, France, and Switzerland on Wednesday. US futures pointed to a renewed sell-off on Wall Street. The S&P 500 and Dow Jones indices were both down 1.3% and the tech-heavy Nasdaq was down 1.8% at around 9.30am in the UK.

Economic data on Thursday also exceeded expectations in the US, with third-quarter US GDP leaping by a record 33.1% on an annualized basis, and new weekly jobless claims data improving by a greater than expected margin.

The market rout had continued in Asia overnight. China’s Shanghai Composite shed 1.5%. Japan’s Nikkei fell 0.8%, ending its worst week in three months. Hong Kong Hang Seng lost 0.5%.

Strong GDP growth curbs losses in European markets, Reuters, Oct 30