European stocks flat amid soaring COVID-19 cases and vaccination campaigns

Kumutha Ramanathan
·3-min read
Britain's Prime Minister Boris Johnson visits at a COVID-19 vaccination centre at Ashton Stadium in Bristol, Britain January 11, 2021. Eddie Mulholland/Pool via REUTERS
Britain's prime minister Boris Johnson visits a COVID-19 vaccination centre in Bristol, England. (Credit: Eddie Mulholland/Reuters)

European equities made modest moves on Tuesday as COVID-19 vaccination campaigns get underway and global markets come off a mild start to the trading week amid concerns of unsustainable valuations across asset classes.

The FTSE 100 (^FTSE) closed down 0.6% in London. Germany’s DAX (^GDAXI) fell 0.1% in Frankfurt, while the CAC 40 (^FCHI) was lower 0.2% in Paris.

US markets were also rather muted. The S&P (^GSPC) was flat at the end of the trading day in London. The Dow Jones (^DJI) gained 0.1% and the Nasdaq (^IXIC) was higher 0.3%.

The global COVID-19 vaccination campaign continues with mixed effectiveness between nations.

  • The UK has been among the leaders in getting people inoculated relatively swiftly. Around 2.2 million people have received the first dose of a COVID-19 vaccine between 8 December 2020 to 10 January 2021. Mass vaccinations sites also opened on Monday. Also, as the UK government continues to try to revive the economy amid record high job losses and unemployment, a top policymaker at the Bank of England (BOE) backed the chancellor’s concerns over Britain’s growing debt pile, saying state support for the economy is not a “free lunch.”

  • Meanwhile, France has been struggling with hesitancy among the public to get the vaccine and poor distribution logistics.

  • In the US, around 6 million people have received one of the vaccine shots, far below the target set last year of 20 million by the end of 2020, according to the US Centers for Disease Control and Prevention.

US equities also fell from their record highs on Monday, with the S&P 500 down 0.66% at market close and the Dow Jones also trading lower.

READ MORE: 2020 UK retail sales worst on record

“Not withstanding the huge liquidity sloshing around in the system, markets started the week with a mild risk-off tone, pulling back as investors were asking increasing questions about the sustainability of current valuations,” said Deutsche Bank in a recent note.

“With the notable exception of the US dollar, which had its best day since before Christmas, the selloff was across the board, with even some of the traditional safe havens like core sovereign bonds and precious metals losing ground alongside equities and other risk assets.”

In the US, House Democrats introduced a new impeachment resolution against president Trump over his role in last week's storming of Capitol Hill. The resolution will be voted on Wednesday, unless vice president Mike Pence chooses to invoke the 25th amendment to remove the president. Pence is not expected to do so, with him and Trump agreeing to work together for the remainder of the term, according to a senior administration official.

Finally, bitcoin (BTC-USD) resumed its slide against the dollar on Tuesday after some brief respite.

Asian markets were largely in positive territory following a holiday period. Japan’s Nikkei (^N225) gained 0.1% at market close, the Hong Kong Hang Seng (^HSI) leapt up 1.2%, and the Shanghai Composite (000001.SS) was higher 2.2% at market close. South Korea’s KOSPI (^KS11) fell 0.7%.

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