Global stocks sell-off continues but strong GDP limits losses in Europe

Tom Belger
·Finance and policy reporter
·2 min read

WATCH: Strong GDP data limits European sell-off

Global stocks continued to take a hit on Friday, with sharp declines in the US and Asia and stronger-than-expected GDP data only partially curbing losses in Europe.

European stocks had looked set for a fresh rout on Friday as infection rates and new lockdown curbs in France and Germany spooked investors, with futures contracts down sharply before markets opened.

But flash estimates for third-quarter GDP in leading European economies beat analysts’ expectations and limited losses.

France, Italy, Germany and Spain all saw quarter-on-quarter growth beating analysts’ expectations in figures released on Friday morning in Europe.

The FTSE 100 (^FTSE) in London and the DAX (^GDAXI) in Frankfurt were trading lower late on Friday afternoon, though the CAC 40 (^FCHI) was in positive territory in Paris.

READ MORE: ECB leaves policy unchanged as Europe returns to lockdown

European markets had also seen a calmer day on Thursday after three days of declines. European Central Bank (ECB) policymakers signalled there was fresh stimulus to come in December. Its governing council had said it would “recalibrate its instruments, as appropriate, to respond to the unfolding situation.”

A man walks past The Gherkin and other office buildings in the City of London
Financial markets suffered a rout this week. Photo: Toby Melville/Reuters

But president Christine Lagarde acknowledged the eurozone economy was “losing momentum more rapidly than expected,” and tighter restrictions were imposed in Germany, France, and Switzerland on Wednesday.

In the US, the three major indices saw sharp losses. The Dow shed more than 350 points, or 1.4%, as shares of Apple slumped more than 5% on its results the previous day.

Big Tech stocks as a cohort were under pressure on Friday, leading the Nasdaq to underperform. The tech-heavy index fell more than 2%, while the S&P 500 fell about 1.5%.

It comes in spite of strong results from Facebook (FB), Google’s parent company Alphabet (GOOG) and Amazon (AMZN) as a string of US tech giants reported their earnings on Thursday, with investors seemingly hungry for even greater growth.

READ MORE: Heavy selling on global markets as COVID-19 cases rise

Economic data on Thursday also exceeded expectations in the US, with third-quarter US GDP leaping by a record 33.1% on an annualized basis, and new weekly jobless claims data improving by a greater than expected margin.

The market rout had continued in Asia overnight. China’s Shanghai Composite (000001.SS) shed 1.5%. Japan’s Nikkei (^N225) fell 0.8%, ending its worst week in three months. Hong Kong Hang Seng (^HSI) lost 0.5%.

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