By Geoffrey Smith and Peter Nurse
Investing.com -- The sell-off in European stock markets accelerated mid-morning Friday as Covid-19-related lockdowns returned to the continent, setting the stage for another potential economic contraction over the winter.
Austria said it will reimpose a nationwide lockdown and will also introduce mandatory vaccination from February, in an effort to stem a spiralling infection rate. Germany's health minister Jens Spahn also refused to rule out similar measures, prompting fears that Europe's largest economy could be shut down for the third winter in a row.
At 5:08 AM ET (1008 GMT), the DAX in Germany traded 0.3% lower, the CAC 40 in France fell 0.5% and the U.K.’s FTSE 100 traded 0.3% lower. The worst-hit markets were oil-sensitive Russia, which fell 1.8% and travel and tourism-heavy Spain, which fell 1.7% as the original pattern of pandemic trades reasserted itself.
Non-Covid news was also less than stellar on Friday: German producer price inflation numbers for October showed prices rising another 3.8% on the month, taking the annual rate of factory gate inflation in Europe's largest economy up to 18.4%.
French data also showed unemployment rising more sharply than expected to 8.1% of the workforce in the third quarter.
By contrast, the latest GfK consumer confidence index in the U.K. unexpectedly rose to -14 from -17 in October, while the country’s retail sales rebounded more strongly than expected in the same month, by 0.8%. This further fleshed out a picture of an economy that is strong enough to withstand a modest increase in interest rates by the Bank of England with Covid cases in this country now falling.
In corporate news, Kingfisher (LON:KGF) stock fell 4% after the DIY giant reported a drop in sales year-on-year as consumer spending balanced out after the pandemic.
Airline and airport stocks tumbled, with IAG (LON:ICAG), the owner of British Airways and Iberia, losing 4.9% and EasyJet (LON:EZJ) stock falling 5.3%. Online payments company Adyen (AS:ADYEN) and meal kit deliverer HelloFresh (DE:HFGG) went in the other direct, gaining 2.0% and 6.8% respectively. Delivery Hero (DE:DHER) also rose 3.6% while Just Eat Takeaway (AS:TKWY) rose 4.6%.
Later Friday, the U.S. House of Representatives is set to vote on the Democratic Party's $2 trillion spending bill after Speaker Nancy Pelosi finally appeared to have overcome internal divisions in her party. Wall Street is set to end the week on a calm note, with broad confidence in the U.S. economy only partly dimmed by pockets of uncertainty.
In oil markets, U.S. crude futures continued to move lower, set to recover hefty weekly losses, as the U.S., China and India plot a coordinated release of strategic petroleum reserves.
WTI was down 1.0% at $77.62 a barrel, while Brent was down 1.2% at $80.30. Gold futures were up 0.3% at $1,866.10 an ounce.