DE30: European stocks struggle for direction

 

European indices are trading mostly lower on Friday as tense Brexit negotiations and surging COVID-19 cases weighed on market sentiment. The EU urged the UK to back down on plans to override the Withdrawal Agreement "by the end of the month" or risk jeopardising trade talks. Meanwhile UK reached an agreement with Japan regarding trade deal, thanks to which British businesses would benefit from tariff-free trade with Japan. The tentative agreement still have to be approved by the governments of both countries and  is scheduled to come into the force at the end of the year. Yesterday France reported record number of 9843 new COVID-19 cases while Spain recorded 10,764 new daily cases, the highest figure since the start of the pandemic. Meanwhile ECB chief economist Philip Lane warned that the deflationary impact of the Covid-inspired recession has not been banished. "Inflation remains far below the aim and there has been only partial progress in combating the negative impact of the pandemic on projected inflation dynamics," "It should be abundantly clear that there is no room for complacency.” Lane said in a blog post. On the data front, German consumer prices declined in August for the second consecutive month, confirming preliminary data; while UK monthly GDP and industrial production readings showed that economy is slowly recovering from the pandemic. Meanwhile consumer prices in Spain fell for a fifth straight month in August, while industrial production data came  slightly above analysts' expectations, pointing to a much smaller downturn in July.

 

Bayer (BAYN.DE) signed a strategic collaboration agreement with Recursion Pharmaceuticals, Inc., a digital biology company industrializing drug discovery for the treatment of fibrotic diseases. According to Bayer, the collaboration with Recursion will enable the former to discover small molecule drug candidates targeting novel biology for the treatment of fibrotic diseases and the portfolio will complement its expertise in cardiovascular research with digital technologies.

Henkel (HEN3.DE), a leading manufacturer of well-known beauty care and hair products will invest $23 million in its North American manufacturing facilities. This major investment will provide new equipment and a series of improvements that will support additional production of Dial® liquid hand soap and hand sanitizers.

Volkswagen's (VOW3.DE) truckmaking unit MAN is planning to implement a restructuring plan in order to improve earnings and finance investment in new vehicles. The restructuring plan would include the closure of three factories and a reduction of employment by around 9500 jobs, while company's operating result is expected to jump by 1.8 billion euros ($2.1 billion).