European equity traders were in a cautious mood on Friday, following a late sell-off on Wall Street overnight.
Stocks tanked in late trade in New York on Thursday after markets had closed in Europe. Tech stocks led the rout, with the Nasdaq (^IXIC) closing down 2%.
“While there was no specific impetus to the selloff, there were a couple of negative headlines that may have reinforced the week-old risk-off sentiment,” said Jim Reid, a senior strategist at Deutsche Bank.
“A slimmed down US stimulus bill failed to pass the Senate (somewhat expectedly), and Microsoft announced that they had detected new cyberattacks targeting the US elections.”
Against this backdrop, European markets mostly treaded water. The DAX (^GDAXI) was down 0.2% by mid-afternoon on Friday, while the CAC 40 (^FCHI) and Italy’s FTSE MIB (FTSEMIB.MI) were both flat. Spain’s IBEX 35 (^IBEX) fell 0.6%.
Reid said rising COVID-19 cases in Europe were a concern for investors in the region.
“Yesterday was the first time since early spring that new daily cases in the European Union and the U.K. surpassed those in the US,” he said.
The FTSE 100 (^FTSE) in London outperformed continental rivals, rising 0.4%. Data published on Friday morning showed the UK economy grew by 6.6% in July. Separately, the UK government announced it had signed its first post-Brexit free trade agreement with Japan.
The index was also boosted by a weakening pound — FTSE 100-listed companies make around 70% of their earnings in dollars, so a weak pound flatters share prices.
Futures had been pointing to a strong open on Wall Street but momentum had faded slightly by the time the opening bell rang. The S&P 500 (^GSPC) was up 0.3% shortly after the open on Friday, while the Dow Jones (^DJI) gained 0.3%, and the Nasdaq (^IXIC) added 0.4%.
Asian markets rallied overnight. Japan’s Nikkei (^N225) gained 0.7%, the Hong Kong Hang Seng (^HSI) rose 0.6%, the Shanghai Composite (000001.SS) added 0.8%, and the Shenzen Component (399001.SZ) climbed 1.5%.