European stocks fell on the last day of the month, quarter and first half of 2021, with investors looking past encouraging inflation data to focus on worries over a contagious strain of COVID-19. U.S. stock futures also came under pressure.
The Stoxx Europe 600 index
SXXP,
dropped 0.6% to 453.77 The index has gained around 13% in the first half of the year, 5% for the second quarter and just over 1% for the month. The German DAX
DAX,
and the French CAC 40
PX1,
lost close to 1% each, while the FTSE 100 index
UKX,
fell 0.6%.
“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 Joshua Mahony, senior market analyst at IG, in a note to clients.
That dragged names such as Carnival
CCL,
and TUI TUI,
lower “on growing fears that rising delta variant cases could soon place the U.K. on the restricted list for many international destinations,” said Mahoney. The delta variant is making up the majority of U.K. cases and spreading across several countries, and some are worried that it could begin to dent the global recovery.
Read: Here’s how different countries are handling arrivals from Delta variant hotspots
Negative sentiment spread to U.S. stock futures
ES00,
YM00,
NQ00,
which were posting declines ahead of the ADP private-sector hiring report, which preludes Friday’s key jobs report. The S&P 500
SPX,
and Nasdaq Composite
COMP,
finished Tuesday’s session in record territory after upbeat data.
Data in Europe showed a consumer prices dipped to 1.9% in June from 2% in May, according to a flash estimate from Eurostat. Energy prices drove the annual rise for inflation, a 12.5% gain on the year.
Investors shouldn’t get complacent about inflation in the region, said Willem Sels, chief investment officer, private banking and wealth management at HSBC, in a note to clients. He sees the headline number hitting 2.8% by the end of the year before starting to drift lower.
“While oil and other commodities will become less of a driver for inflation this year, low inventories of industrial goods mean that goods price inflation will remain with us until companies have replenished their stock, which may take several months,” said Sels. “And in services, the current pricing pressure we are all experiencing when trying to book a staycation or visit our favourite restaurants will remain until the supply of labour in these sectors catches up with demand later in the year.”
Banks were among the biggest decliners in Europe, with shares of HSBC
HSBC,
HSBA,
BNP Paribas BNP,
and Banco Santander
SAN,
SAN,
down 1% or more each.
Auto makers were also under pressure, with shares of Porsche Automobil Holding
PAH3,
down 4.4% and Volkswagen
VOW3,
VOW,
off 2.5% .
Acciona Energia set its initial public offering at the lower end of an expected range, seeking a market capitalization of around 8.8 billion euros ($10.47 billion). The renewable energy company, which is owned by Spain’s Acciona SA
ANA,
said the IPO would be priced at EUR26.73 per ordinary share. Acciona shares fell 1.4%.
