European shares finish on mixed note

Published On: November 18, 2020Categories: Stocks & Shares2.4 min read

The Stoxx 600 dropped 0.24%, the DAX fell 0.04%, while the CAC 40 gained 0.21%

European shares finished the session on a mixed note as some investors took profits and the euphoria over test results from a second Covid-19 vaccine fizzled out.

Having risen 1.2% yesterday, the pan-European Stoxx 600 was down 0.24% at 388.82, with the German DAX little changed, down 0.04% to 13,133.47, while the French CAC 40 was up 0.21% to 5,483.0.

Dealers haven’t forgotten that Moderna’s possible vaccine for Covid-19 has an effective rate of 94.5%, but for the time being they are happy to square up their positions. In the space of one week, there have been two very encouraging stories with respect to coronavirus drugs, so there is a growing feeling that the pharma sector is closing in on the virus, but there is always the possibility of setbacks, said CMC Markets analyst David Madden.

Investors were still wary of the number of rising cases in the US and across Europe. The American states of California and New Jersey both tightened restrictions, while President-elect Joe Biden warned that more lives would be lost unless incumbent leader Donald Trump stopped blocking the transition of power.

A ripple of tighter lockdown restrictions in Europe forced investors to consider the pandemic present rather than the vaccine future on Tuesday, said Spreadex analyst Connor Campbell. It seems like the Moderna news doesn’t have quite the same legs as the initial Pfizer/BioNTech announcement, though the latter vaccine update did also have the benefit of coming in the swell of Biden election win gains.

Barring another vaccine update – a progress report from the AstraZenaca-Oxford trial is the most anticipated of those left – the day’s highlight could be the US retail sales. Not that they’re particularly promising; analysts are expecting a drop from 1.9% to 0.5% month-on-month, Campbell said.

In equity news, Banco Sabadell shares tacked on a further 7%, which came on the heels of a 25% surge on Monday, as the lender confirmed takeover talks with BBVA almost immediately swiftly after the larger Spanish bank reached a deal to sell its US operations to PNC Financial Services for $11.6bn. BBVA shares fell 4% after soaring 15% the day before.

Should the Banco de Sabadell move go ahead, it is likely that a cost cutting programme would be introduced, which would probably mean branch closures. The British bank TSB is owned by Banco de Sabadell and that could be spun off as the new entity might seek to focus on the domestic market, said CMC’s Madden.

Alstom shares were 3% higher, reversing early sales after launching a €2bn stock sale to fund the company’s acquisition of Bombardier Transportation.

Shares in low-cost airline easyJet were off 2% after the company reported the first loss in its 25-year history. The company posted a pre-tax loss of £1.3bn as the Covid-19 pandemic battered demand and forced a grounding of the carrier’s entire fleet.

Shares in tobacco firm Imperial Brands jumped as the company reported a rise in full year sales and forecast growth in 2021.

Intermediate Capital Group shares were sharply higher too, as the fund manager posted a sharp rise in first half profits amid strong demand for its funds and a recovery in portfolio valuations across the period.

About the Author: Jonathan Adams

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