European Stocks Drop On Growing Virus Concerns

European stock markets sank Wednesday as coronavirus-linked fears eclipsed stimulus hopes and investors waited on the US Federal Reserve's first interest rate decision under President Joe Biden, dealers said

London, (UrduPoint / Pakistan Point News - 27th Jan, 2021 ):European stock markets sank Wednesday as coronavirus-linked fears eclipsed stimulus hopes and investors waited on the US Federal Reserve's first interest rate decision under President Joe Biden, dealers said.

Investors also trod warily as they weighed distant hopes of a long-term recovery against immediate worries over Covid-19 infection rates and mutations, combined with slow vaccine rollouts.

"Markets are on the slide as ongoing economic struggles overshadow the potential for near-term stimulus," said Joshua Mahony, senior market analyst at trading firm IG.

The dollar rose against the euro before the Fed's latest decision on interest rates, which are forecast to be held at rock-bottom given the pandemic uncertainties.

Sterling briefly struck a new two-and-a-half year peak at $1.3759 in Asian trade as the market took a positive view of the UK's vaccination programme.

Later Wednesday, investors will closely follow Fed Chair Jerome Powell's press conference for clues on the outlook for US monetary policy.

However, there seems little chance of new Fed stimulus because Biden has already proposed a gigantic $1.9 trillion rescue package to boost the nation's virus-ravaged economy.

"The Federal Reserve comes back into focus today, with traders increasingly looking towards the US for some form of stimulus boost in the coming weeks," Mahony said.

"Unfortunately, with Biden expected to drive forth his $1.9 trillion stimulus coronavirus support package, we are unlikely to see the Fed turn up the dials at today's meeting." At the same time, investor optimism remains dented by signs that Biden's stimulus could face a tough ride through Congress, while there was also increasing talk of a stock market correction following massive recent gains.

With new, more transmissible versions of the coronavirus spreading rapidly through populations, governments are being forced to impose strict containment measures and their efforts to administer jabs are hampered by distribution problems.

Observers said that while the overall outlook was positive -- the International Monetary Fund has lifted its 2021 global growth forecasts -- the first few months of the year could be painful.

Asian equities struggled to rebound from Tuesday's sell-off after fresh losses on Wall Street.

Hong Kong fell again after being battered Tuesday by the Chinese central bank's decision to take funds out of the financial system as it looked to prevent an asset bubble.

- Key figures around 1230 GMT - London - FTSE 100: DOWN 0.7 percent at 6,605.42 points Frankfurt - DAX 30: DOWN 1.2 percent at 13,702.37 Paris - CAC 40: DOWN 0.9 percent at 5,473.43 EURO STOXX 50: DOWN 1.2 percent at 3,551.01 Tokyo - Nikkei 225: UP 0.3 percent at 28,635.21 (close) Hong Kong - Hang Seng: DOWN 0.3 percent at 29,297.53 (close) Shanghai - Composite: UP 0.1 percent at 3,573.34 (close) New York - Dow: DOWN 0.1 percent at 30,937.04 (close Tuesday) Euro/dollar: DOWN at $1.2116 from $1.2160 at 2200 GMT Dollar/yen: UP at 103.82 yen from 103.62 yen Pound/dollar: DOWN at $1.3715 from $1.3736 Euro/pound: DOWN at 88.33 pence from 88.52 penceWest Texas Intermediate: UP 0.4 percent at $52.84 per barrelBrent North Sea crude: UP 0.5 percent at $56.21 per barrel