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European stocks tumble despite $1.9tn US stimulus plan

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Tom Belger
·Finance and policy reporter
·3-min read
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The financial district of La Defense is seen at dusk near Paris, France, March 3, 2016. REUTERS/Christian Hartmann
The financial district of La Defense is seen at dusk near Paris, France. Photo: REUTERS/Christian Hartmann.

European stocks tumbled on Friday as major economies braced for further lockdown restrictions, despite plans for a $1.9tn (£1.4tn) US government stimulus package.

Leading indices in Europe ended the week lower, marking a reversal after four weeks of gains as vaccines have been rolled out.

Britain’s FTSE 100 (^FTSE) in London shed 1.1% after November GDP data showed the first decline since April. Germany’s DAX (^GDAXI) in Frankfurt lost 1.6% and France’s CAC 40 (^FCHI) 1.5% at around 3.40pm in London.

Coronavirus restrictions are being tightened in several countries struggling to contain the resurgent virus as they race to roll out vaccines.

The French government said late on Thursday a 6pm curfew in parts of France will be extended to the whole country.France’s prime minister Jean Castex also said the government would have to “decide without delay on a new lockdown” if the pandemic worsened in the coming days.

WATCH: Biden's Relief Plan Is 'Big and Bold,' Rep. Meeks Says

READ MORE: UK economy on brink of first double-dip recession since 1970s

In Germany, chancellor Angela Merkel is reported to be pushing for tougher measures, including more home working. German schools and ‘non-essential’ stores have been shut since last month.

The UK government is also under heavy pressure to tighten rules in the UK as the daily death toll has hit a record high, though ministers are currently focusing on stricter enforcement and calls for greater compliance with existing rules.

Stocks also slid as US markets opened, shortly after leading banks posted earnings results. The S&P 500 (^GSPC), the Dow (^DJI) and the Nasdaq (^IXIC) were all trading 0.4% in the early hours of the trading day. Retail data was also worse than expected.

Watch: Stocks lower as further lockdowns loom in Europe

The dip in stocks comes in spite of plans confirmed by president-elect Joe Biden for a $1.9tn for a COVID-19 relief package, including direct grants to individuals, small firms and state and local governments and a $15 national minimum wage. The plans are likely to meet significant Republican opposition, however.

Analysts said the declines also reflected the fact a sizeable plan had mostly been priced in by investors. Some were expecting higher stimulus cheques, while other analysts flagged concerns over potential tax hikes to fund the measures.

Asian markets had also mostly dipped overnight, after US president Donald Trump announced sanctions for nine Chinese firms over accusations of military ties.

China’s Shenzhen Component (399001.SZ) slid 0.3% amid higher COVID-19 infections in the country, while Japan’s Nikkei 225 (^N225) shed 0.5% and the KOSPI (^KS11) in South Korea shed 2%.

China’s new infection levels hit a 10-month high on Friday, with more than 28 million people in lockdown, according to Reuters. It comes ahead of the Lunar New Year holiday next month, with concerns over the potential for higher travel.

WATCH: What does a Biden presidency mean for the global economy?