By Sruthi Shankar and Susan Mathew
Jul 16 (.) – European stocks fell on Friday as a decline in iron ore exports from Rio Tinto hit the mining sector, while strong gains from luxury brands were overshadowed by concerns about their sustainability amid growing COVID-19 cases.
* The pan-European STOXX 600 Index reversed initial gains for the third consecutive session, falling 0.3% and taking weekly losses to 0.6%.
* The mining index fell 2.8% after Rio Tinto lost 3.4% after reporting a 12% drop in quarterly iron ore shipments, dragging other big names in the sector such as BHP and Glencore to lose 1.5% and 3.5%, respectively.
* Concerns about higher inflation and rising COVID-19 infections, causing a slowdown in the economic recovery, have been on investors’ minds this week, leading many to the safety of bond markets .
* “On the one hand, a strong start to the second quarter earnings season in the United States and dovish rhetoric from central banks continued to provide support. (But) several factors have weighed on the outlook, including weaker data in China and signs that growth and earnings have peaked, “said Silvia Dall’Angelo, Senior International Business Economist at Federated Hermes.
* Next week eyes will be on the meeting of the European Central Bank, to see if there is a change in monetary policy after the recent update of its strategy.
* Sweden’s Ericsson plunged 9.4% after the telco reported second-quarter structural earnings below market estimates, hit by a decline in sales in mainland China.
* Luxury stocks fell as Burberry fell nearly 5% despite strong sales. If there are no changes to its forecast for the full year it could be a sign that the improvement cannot be sustained, said one analyst.
(Report by Sruthi Shankar in Bengaluru. Edited in Spanish by Rodrigo Charme)