European stock markets rebound after sharp sell-off

·Business reporter
·3 min read
Stock markets report
The weekly case average in Britain stands at its highest of the entire pandemic, according to government reports, whilst in London the numbers in hospital have risen by a third over the last week. Photo: Hannah McKay/Reuters

European stock markets rose on Tuesday, after a disappointing start to the week, as investors welcomed a delayed decision on new COVID restrictions in the UK.

In London, the FTSE 100 (^FTSE) closed 1.3% higher, with basic resources and financial services leading the gains, while the French CAC (^FCHI) gained 1.4% and the DAX (^GDAXI) was 1.3% higher In Germany.

It comes as the UK cabinet decided to wait for more data on hospitalisations and deaths before announcing any further measures to curb the spread of the virus.

The weekly case average in Britain stands at its highest of the entire pandemic, according to government reports, whilst in London the numbers in hospital have risen by a third over the last week.

Things are also grim on the bloc, with Germany renewing restrictions in the country amid a fourth wave, and the Netherlands entering a lockdown.

German chancellor Olaf Scholz said on Monday that “we need new restrictions on personal contacts so that we’re well prepared when the new variant of the virus spreads everywhere in Europe”. He is set to hold talks with regional leaders to discuss further measures.

Watch: 'Extremely difficult' Omicron surge grips Europe

Rishi Sunak also unveiled a £1bn ($1.33bn) fund for UK hospitality firms hit hardest by the latest pre-Christmas surge in Omicron cases, including cash grants of up to £6,000 per premises for each eligible company.

The Chancellor responded to mounting pressure from business groups on Tuesday to provide further support amid rising cases of the new strain across the country, booking cancellations, and reduced footfall.

Elsewhere, gas prices jumped to their highest since their October record as Russia halted flows to Europe via a key pipeline.

Benchmark European prices rose as much as 5.5% on Tuesday after the amount of gas entering Germany’s Mallnow compressor station dropped to zero, Bloomberg said.

Read more: UK borrowing falls but remains second highest for November on record

Across the pond, the S&P 500 (^GSPC) rose 0.8% and the tech-heavy Nasdaq (^IXIC) climbed 1%. The Dow Jones (^DJI) advanced 1.1% lower at the time of the European close.

US markets fell sharply on Monday after Democrat senator Joe Manchin said he could not support the president Joe Biden’s new $1.9trn build back better infrastructure bill, raising the prospect that US GDP could be substantially lower in 2022 as key projects get postponed or pared back.

“Against a backdrop of concerns about rising inflation and less accommodative central banks, we saw big drops across the board but in particular in some of the more highly valued areas of the market,” Michael Hewson of CMC Markets said.

Read more: UK borrowing falls but remains second highest November on record

Asian shares advanced on Tuesday, shrugging off a sour session on Wall Street, as Chinese markets cheered Beijing's move to help troubled property firms. However, surging cases of the Omicron variant continued to worry investors.

In Japan, the Nikkei (^N225) climbed 2.1% after two sessions of decline, while the Hang Seng (^HSI) rose 1% in Hong Kong and the Shanghai Composite (000001.SS) was 0.9% higher on the day.

Watch: COVID-19: What potential COVID restrictions could Boris Johnson introduce - and when?

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