Investing.com – European stock markets weakened Tuesday amid worries the recent tech selloff on Wall Street will continue when the U.S. market returns from holiday.
At 4:25 AM ET (0825 GMT), the DAX in Germany traded 0.5% lower and the CAC 40 in France fell 1.0%. The U.K.’s FTSE index was down just 0.4%, outperforming as the index’s exporting companies benefited from sterling’s weakness caused by the revival of Brexit tail risks.
Investors are keeping a wary eye on the return of the U.S. market after the Labor Day holiday, and the news doesn’t look good with U.S. futures contracts pointing to a sharply lower open, particularly for the dominant tech sector. This has seen mammoth gains throughout the Covid-19 pandemic, but it hit the skids late last week due to doubts over positioning and stretched valuations.
Elsewhere, the European Central Bank meets on Thursday, and expectation is growing that it may be forced into action following the Federal Reserve’s change in inflation tolerance at its last meeting at the end of August.
“The ECB is under pressure to prevent further strengthening of the EUR with core inflation already at record-lows. We expect [President Christine] Lagarde to bring promises of more policy easing to next week’s ECB meeting, if not concrete easing measures,” analysts at Nordea said, in a research note published late last week.
The eurozone economy is expected to rebound in the third quarter from a record-breaking drop in the three months through June. France’s official statistics agency confirmed earlier Tuesday its forecast of a 9% drop in gross domestic product in 2020 due to the coronavirus pandemic. Overall though, second-quarter GDP numbers have been close to the ECB’s baseline forecast, board member Isabel Schnabel said last week.
In corporate news, Travis Perkins (LON:TPK) stock dropped 7% after the builders merchant posted a pretax loss for the first half of the year and declined to declare an interim dividend.
EasyJet slumped 4.2% as the airline said additional quarantine restrictions to seven Greek Islands will mean it will fly “slightly less than 40%” of its planned schedule over the current quarter. Elsewhere in the travel sector, car rental company Europcar fell over 30% as it announced a major debt restructuring.
Oil prices dropped Tuesday, with the U.S. WTI contract suffering the bulk of the selling after the U.S. Labor Day long weekend, which marks the end of the peak U.S. driving season.