European shares were under pressure at the end of the month, weighed down by increases in case numbers of the Covid-19 Delta variant and soft survey data released overnight in China – but off their worst levels.
“Travel stocks are extending their losses after a period of downward pressure, with the prospect of heightened restrictions on travel denting hopes of a late summer boost to business,” said IG senior market analyst, Josh Mahony.
The pan-European Stoxx 600 was down 0.61% at 453.61, alongside a 0.94% drop on the German Dax to 15,543.80, while the FTSE Mibtel was down 0.90% to 25,128.39.
Travel stocks were all in the red as Delta variant cases globally started to rise, threatening hopes of a recovery in the leisure and airline sector this summer. EU states were also imposing greater restrictions on travellers from the UK, which was seeing a severe spike in daily cases.
Among the stocks affected were travel firm TUI, cruise line operator Carnival, Frankfurt airport owner Fraport, Aeroports de Paris and Deutsche Lufthansa.
Adding to the selling pressure, the day before, the European Commission had announced that it had begun an in-depth study of British Airways parent IAG’s planned takeover of Spain’s Air Europa. IAG shares were 1.15% lower on the news.
In other company news, Dutch eyewear store operator Grandvision surged 14% as Ray-Ban maker EssilorLuxottica said it had decided to go ahead with a planned takeover of the company. EssilorLuxottica’s shares were up 1%.
In the background, the latest economic data out of the euro area printed well ahead of forecasts, but a reading on China’s services releases overnight was acting as an offset.
German unemployment claims declined by 38,000 in June, nearly doubling economists’ forecasts, while in France, May household consumption – outside of services – jumped by 10.4% month-on-month (consensus: 7.5%).
Across the world on the other hand, in China, the official non-manufacturing Purchasing Managers’ Index dropped from the 55.2 point level for May to 53.5 in June (consensus: 55.3), confirming some economists’ wariness of a possible mid-year slowdown.
Still ahead was the US ADP private sector payrolls report for June, at 1315 BST.
