A year on from the first wave that sent investors spiralling, European markets are struggling under the fog of a third wave of Covid-19.
The extended lockdown in Germany, and Boris Johnson’s claim he has ‘no doubt’ that the third wave will hit British shores, has kept the markets, if not panicked, then in a state of quiet concern.
Given the extent to which inflation fears have impacted the markets in recent week, one would think a UK CPI reading of 0.4%, half of the 0.8% forecast, would be a boost to the FTSE. Instead the UK index slipped 0.4%, lurking at a 19-day low of 6,679.
This despite the pound slipping in the aftermath of that inflation miss. GBP/USD dropped 0.4% to $1.369, its lowest level since early February, while against the euro sterling was down 0.2%,
As is to be expected, the third wave fears were more pronounced in those indices emanating from mainland Europe.
The DAX dropped 100 points, though it still holding only around 20 points below 14,600. The CAC lost 0.5%, putting it at a 2-week low of 5,910. And the Spanish IBEX 35 was the worst hit of the 3, tumbling 0.8% to 8,315.
After falling under 32,500 last night, the Dow Jones is set to attempt a 0.2% increase later today. Whether it can withstand the creeping sense of dread in Europe, however, is another matter entirely.
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