European stocks dropped on Tuesday morning as worries over the threat to economic recovery of new coronavirus cases in the U.S. and weak German data put the brakes on Monday’s rally.
The pan-European Stoxx 600 fell 1.1 percent by late morning, with travel and leisure stocks shedding 1.5 percent to lead losses as all sectors except autos, and all major bourses, slid into negative territory, according to CNBC.
European stocks have dipped below the mixed tone set in Asia Pacific overnight, where markets in South Korea and Japan retreated, while mainland Chinese shares continued Monday’s blockbuster rally.
German industrial production data came in weaker than expected on Tuesday morning, rising by 7.8 percent in May, a more modest rebound than the 10% expected by analysts polled by Reuters following a -17.5 percent contraction in April.
The European Commission on Tuesday cut its economic forecasts, and now expects the 27-member region to contract by 8.3 percent this year, followed by a rebound of 5.8 percent in 2021.
In May, the Commission estimated a 7.4 percent contraction for total GDP across the region this year, with a rebound of 6.1 percent in 2021.
Stateside, the Greater Miami area on Monday became the latest new Covid-19 hot spot to reverse some of its reopening efforts, as new cases continue to surge nationwide.
There are now more than 2.9 million confirmed cases in the U.S. and more than 130,000 deaths, according to data compiled by Johns Hopkins University.
Meanwhile, further alarm bells have been sounded over the possible airborne spread of the virus, with the World Health Organization now reviewing a request from over 200 scientists for renewed guidance.
However, investor focus remains attuned to news of potential treatments and vaccines, with Regeneron Pharmaceuticals in the U.S. and China’s Sinovac Biotech both launching late-stage trials on Monday of an antibody cocktail and potential vaccine, respectively.
Markets will also be paying attention to trade tensions between the world’s two largest economies. U.S. President Donald Trump’s Chief of Staff Mark Meadows said Monday that Trump is considering executive orders targeting Chinese manufacturing and immigration, without giving further details at this stage.
In the U.K., investors are looking ahead to Wednesday’s announcement of the government’s plans for the next stage of the country’s economic recovery from the pandemic, with hopes for further fiscal stimulus from Chancellor Rishi Sunak.
Biggest movers
In terms of individual share price action, British software firm Micro Focus tumbled more than 10 percent after swinging to a first-half loss and offering a bleak outlook for the rest of the year.
Bayer fell 6.4 percent after a U.S. judge questioned part of the German life sciences company’s settlement for claims relating to its weedkiller Roundup causing cancer.
At the top of the European blue chip index, Finnish energy manufacturer Wartsila climbed 3.5 percent.
