European Index Firms Closed on Chaos

The second quarter of the year has not been the most fruitful for European stock index firms. London’s FTSE 100 ended flat while the pan-continental STOXX 600’s, with 60% of constituents tradeing lower, slipped by 1.6%. Similarly, Germany’s DAX 30 fell by 0.10%, while France’s CAC 40 climbed 0.60%.

Europe’s three best performing sectors include real estate, retail, and food and beverage. Belgian brewer AB InBev, which owns more than 400 beer brands, had a more than expected 5% increase. FDJ, a French-based lottery and online games operator, jumped up by 14%.

On the other hand, the worst performers of the European market include automobiles and parts, banks, and chemicals. The sluggish performance caused Germany’s Volkswagen to drop by 800 million euros or $940 million amid a 27% decline in vehicle deliveries due to pandemic. French multinational automobile manufacturer, Renault, tumbled by 7.3 billion euros with a net loss. 

UK automotive distributor and retailer Inchcape fell by more than 10%, and Airbus Group, an airplane maker from France, swung to a second-quarter net loss of 1.16 billion euros amid travel restrictions that hit the airline industry more than any other sector. Spain-based bank BBVA suffers a more than 50% net loss. 

German Economic Setback since 1970

30 days after the quarter ended, Germany recorded its worst economic deterioration since 1970. The country’s GDP contracted by 10.1% from the expected 9% prediction by economists, wiping its 10-year economic prosperity.

There was a massive slump for exports, imports of goods and services. The unemployment rate was 6.4% in July, even with more employees participating in a furlough program since it entered into force.

This contraction is driven by fears for the second wave of coronavirus cases across Europe. Wall Street’s big three, namely DJIA, the NASDAQ Composite, and S&P500 indices closed on a positive note, as the Federal Reserve settled to maintain its dovish monetary policy with 0 to 0.25% interest rates until the end of the year.