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European stock markets mixed amid COVID-19 third wave fears and UK-EU vaccine row

LaToya Harding
·Contributor
·4-min read
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European stocks were mixed on Monday amid fears of a third wave of COVID-19 across the bloc, and an escalating row between the UK and European Union (EU) over access to AstraZeneca’s (AZN.L) vaccine.

In London, the FTSE 100 (^FTSE) closed 0.26% higher after starting the day in the red and the German DAX (^GDAXI) followed suit, climbing 0.19%.

However, the French CAC (^FCHI) didn't make it out of negative territory, tumbling 0.56% on the day.

Travel and leisure stocks were amongst the worst performers as the prospect of extended lockdowns across Europe weighed on sentiment.

France, Germany and Italy announced further lockdown measures over the weekend while experts warned that overseas summer holidays for Brits were looking "unlikely."

British Airways owner IAG (IAG.L) tumbled 6% on the back of the news, while EasyJet (EZJ.L), Ryanair (RYA.L), Tui (TUI.L) all took similar falls. On the continent, German airline Lufthansa (LHA.DE) and Air France (AF.PA) was more than 3% lower.

IAG stock tumbled 6% on Monday morning. Chart: Yahoo Finance
IAG stock tumbled 6% on Monday morning. Chart: Yahoo Finance

Michael Heson of CMC Markets said: "While the prospect of a big European restart on the summer holidays front was always a long shot, events over the weekend have made the prospect even more remote, as the prospect of a third wave across Europe pushes the prospect of any sort of economic restart into the back end of Q2."

Last week, Ursula von der Leyen, president of the European Commission, said she would halt the export of coronavirus vaccines into Britain unless Boris Johnson surrendered British-made AstraZeneca jabs to the EU.

Von der Leyen said the continent has the power to ban exports if the pharma firm did not meet its supply obligations to the EU. "That is the message to AstraZeneca. You fulfil your contract with Europe before you start delivering to other countries," she told German newspapers over the weekend.

READ MORE: Vaccine row heats up as EU doubles down on threat to ban AstraZeneca exports to UK

The UK prime minister is expected to speak to his EU counterparts this week. It came as Britain reached a new milestone, on Saturday, announcing that half of the UK adult population have now received a first dose of a COVID vaccine.

"For now, governments are back rolling out the vaccinations as normal but later this week the EU might look to ban exports of the AstraZeneca-Oxford vaccine and its ingredients to the UK, David Madden of CMC Markets said.

"Such action would be drastic but it seems that Brussels are determined to play catch up with respect to vaccinations rates. The EU has vaccinated approximately 10% of its population while the UK’s rate is above [50%].

BRUSSELS, BELGIUM - MARCH 19: European Commission President Ursula von der Leyen and European Council President Charles Michel (not seen) attend a video conference meeting with Turkish President Recep Tayyip Erdogan (not seen) in Brussels, Belgium on March 19, 2021. (Photo by Dursun Aydemir/Anadolu Agency via Getty Images)
Ursula von der Leyen said the continent has the power to ban exports to the UK if the pharma firm didn't meet its supply obligations to the EU. Photo: Dursun Aydemir/Anadolu Agency via Getty Images

Across the pond, the S&P 500 (^GSPC) edged 0.81% higher and the tech-heavy Nasdaq (^IXIC) climbed 1.6%. The Dow Jones (^DJI) was up 0.24% at the time European stocks closed.

US stock suffered towards the end of last week due to higher bond yields, and tech stocks lost the most ground, but for now the situations have been reversed.

Asian stocks were mixed overnight as a plunge in the Turkish lira sparked talks that capital controls might be needed to stem the rout. At one point, the currency saw it's largest-single day drop in nearly 20 years.

The slide came after president Tayyip Erdogan shocked markets by replacing Turkey's hawkish central bank governor with a critic of high interest rates.

WATCH: Turkey's Lira plunges after central bank upheaval

Japan’s Nikkei (^N225) fell 2.07%, partly on speculation that retail investors could face losses on large long positions in the high-yielding lira.

Elsewhere, the Hang Seng (^HSI) edged 0.27% lower while the Shanghai Composite (000001.SS) climbed 1.14%.

"President Tayyip wants a lower interest rate in the country so that economic growth can pick up more steam," said Naeem Aslam, chief market analyst at Avatrade. "But of course, a sudden decision like the one made over the weekend surprised the market, and a move like the one we are experiencing today becomes inevitable."

Sebastian Galy, a senior macro strategist at Nordea, said: "Faced with inflation and a weak external position, the governor was tightening monetary policy. Many expected this to reverse ahead of next year’s presidential elections but not so soon, hence the abrupt surprise."

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