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European Markets Snap 10-Day Winning Stretch, US Futures Dip

Markets across Europe slide on elevated Delta strain concerns. US stock index futures pressured ahead of Tuesday’s opening.

SageFX - Aug, 17, 21

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Principal Points

  • Markets across Europe slide on elevated Delta strain concerns
  • US stock index futures pressured ahead of Tuesday’s opening

The pan-continental Stoxx Europe 600 declined on Monday. The drop makes the breaking of a solid 10-day winning streak, the longest since 2006. The region-wide index declined on renewed concerns that the Delta variant could sweep into the old continent and disrupt the elevated economic activity.

The Stoxx 600 ended Monday’s session lower by 2.38 points, or 0.50%, to 473.45. The index was previously hovering at record territory, boosted by a strong round of earnings reports among European companies.

Major indexes of single economies in Europe all ended in the red on Monday. UK’s FTSE100 slipped 0.90%, while France’s CAC40 declined 0.83%. Spain’s IBEX35 tumbled 0.81%, and Germany’s DAX dropped 0.32% on the day.

A few hours into the European session on Tuesday, main benchmark averages continue their descend. The Stoxx 600 gauge was around 0.3% lower in early morning trades. Major bourses across the bloc are also in the red today. Spain’s IBEX35 led the losses as the index was down nearly 0.90%. The rest of the major indexes were lower between 0.1% and 0.5%.

Shares of companies in the retail, travel-and-leisure and energy sectors are dragging the European market lower while the broad-based slide is affecting almost all sectors.

US Over Economic Turmoil as Troops Leave Afghanistan

On Wall Street, stock index futures dipped in overnight trading and remain in the red ahead of the opening bell today. Dow futures were lower by more than 150 points, while S&P500 futures dipped nearly half a percent. Nasdaq futures were also pressured, lower by roughly 0.30%. 

Both the Dow Jones Industrial Average and the S&P500 on Monday finished the session in positive territory, extending their winning streak to five days. Each of the two benchmarks closed at a fresh record, prompted by investors’ sustained appetite for stocks as the reopening has gathered pace and economic data has been widely positive. 

Nonetheless, the continued spread of the Delta variant of Covid-19 in the US and Europe poses renewed challenges for developed economies. In the US, official data showed a sharp rise in confirmed daily cases. The country reported 252,369 news cases on Monday, the highest since January 8, which was the peak of the pandemic when the daily cases amounted to 300,777. 

The persistent worries that the Delta strain could dampen the global economic recovery are prompting investors to be more on the defence side today. As stocks in Europe retrench from their all-time highs, and US futures slide, gold prices have been rising. In the early hours of Tuesday’s session, gold added more than 0.3% to its price. The precious metal is now closing in on the $1,800 threshold as it’s currently trading at $1,794 with a session high of $1,796 per troy ounce. 

Gold remains well-bid for a fifth straight trading session, having gained a little under 4% over that period. It is likely that investors are monitoring the unfolding political unrest in Afghanistan. The Taliban’s seizure of Kabul, the capital city, could have potential geopolitical implications on the global spectrum after US President Joe Biden defended the US pullout from the Taliban-controlled areas.

Meanwhile, cryptocurrencies are floating near the flat line on Tuesday. Bitcoin swung from gains to losses earlier in the session and is currently pointing slightly higher, trading at $46,150 per token. Ether is also moderately in the green, up less than 1% on the day, gravitating in the neighbourhood of $3,150 to $3,200 per coin.