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25 Jan 2021 | 19:40

Europe close: Value stocks fall back amid bad news for Covvid-19 vaccine rollouts

(Sharecast News) - European shares fell back at the start of the week with investors scurrying back towards tech stocks as the prospect of extended Covid lockdowns on the Continent battered travel and leisure companies. Those concerns were made worse that AstraZeneca would fail to deliver the agreed number of Covid-19 vaccines to the European Union in the first quarter of 2021 and possibly longer, although the exact reasons behind the snafu at the British drug giant were not immediately clear.

The pan-European STOXX 600 index slipped 0.83%, alongside a 1.66% fall for the German Dax to 13,643.95, while the Cac-40 dropped 1.57% to 5,472.36.

"Just as everyone had decided that value was the place to be, the resurgence of the virus and its mutations, and the closing of borders and reimposition of lockdowns, has reminded investors that the crisis is not yet over," said IG senior market analyst Josh Mahony.

"The flows we saw to value sectors such as engineering, airlines and travel have turned around, and it is tech that is benefiting, coming as it does ahead of a busy week for the sector in terms of earnings."

The Stoxx 600 sub-index sub-index for Travel and Leisure issues retreated 1.88% on the back of the news out of AstraZeneca, which had been announced after the close of trading on Friday.

But it was the more cyclical of the so-called 'value' areas of the market which fared worst, with a gauge of Autos&Parts dropping 2.89% and another for lenders' shares by 2.96%.

Further pain was inflicted as President Joe Biden was set to announce a travel ban on those countries where new variants have emerged, with other nations expected to follow the same course.

In Germany, a survey of business confidence showed morale fell more than expected in January as a second wave of Covid-19 halted a recovery in Europe's largest economy.

To take note of, Apple, Microsoft and Facebook all had results due out later in the same week, along with American Express, Boeing, Tesla and McDonald's.

In equity news, Dutch technology investor Prosus led the gainers with a 4% rise, while compatriot health technology company Philips rose 2.3% after it reported a 7% increase in fourth-quarter core profit.

Shares in Siemens Energy rose after the company swung to a first quarter core profit.

On the downside, the lack of any vision on a recovery from the pandemic continued to batter travel stocks, with aircraft engine maker Rolls-Royce down 5%.

Budget carriers easyJet and Ryanair were both down while cruise ship operator Carnival, holiday operator TUI, Trainline, Accor and Frankfurt airport operator Fraport were also in the red.
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