European stocks gain, but Wall Street rally fizzles

European stocks gained Tuesday, August 11, following strong German economic data, while a Wall Street rally fizzled on renewed worries about a new United States stimulus package.

Confidence among investors in Germany soared to its highest level in almost 17 years in August, according to the ZEW institute’s monthly barometer.

“Hopes for a speedy economic recovery have continued to grow, but the assessment of the situation is improving only slowly,” ZEW President Achim Wambach said. 

The DAX in Frankfurt rose 2%, while London and Paris also registered solid gains.

US stocks were also higher most of the day, but tanked with less than an hour left in the trading session, after the US Senate’s Republican leader Mitch McConnell poured cold water on prospects for a deal on a new pandemic aid bill.

“And so another day has gone by with an impasse and they need to get together,” McConnell said on Fox News.

McConnell’s comments raised doubts about wide expectations that Washington will eventually produce a big fiscal package, despite tensions between President Donald Trump and Democratic congressional leaders.

But some analysts noted the market was due for a pullback.

The comments were a “good excuse to tame the market as the S&P 500 came within 0.4% of its all-time high today,” said Briefing.com.

Quincy Krosby of Prudential said the course correction was sparked by McConnell’s pessimism but added, “This is a lower volume market given the summer lull, and market reactions can move higher and lower more swiftly.”

Russia’s announcement that it had approved a coronavirus vaccine helped fuel the optimistic mood across trading floors for a while, analysts reported, but its impact faded as authorities in other countries greeted the news with skepticism.

In Asia, shares in Next Digital, the media company owned by Hong Kong tycoon Jimmy Lai who was arrested under a Chinese security law, surged 668% at one point thanks to pro-democracy activists buying it.

Lai was released on bail late Tuesday.

Key figures around 8:45 pm GMT

• New York – Dow: DOWN 0.4% at 27,686.91 (close)
• New York – S&P 500: DOWN 0.8% at 3,333.69 (close)
• New York – Nasdaq: DOWN 1.7% at 10,782.82 (close)
• London – FTSE 100: UP 1.7% at 6,154.34 (close)
• Frankfurt – DAX 30: UP 2% at 12,946.89 (close)
• Paris – CAC 40: UP 2.4% at 5,027.99 (close)
• EURO STOXX 50: UP 2.2% at 3,332.12 (close)
• Tokyo: Nikkei 225: UP 1.9% at 22,750.24 (close)
• Hong Kong: Hang Seng: UP 2.1% at 24,890.68 (close)
• Shanghai: Composite: DOWN 1.2% at 3,340.29 (close)
• Euro/dollar: DOWN at $1.1734 from $1.1738 at 9 pm GMT on Monday, August 10
• Dollar/yen: UP at 106.50 yen from 105.96 yen 
• Pound/dollar: DOWN at $1.3047 from $1.3073
• Euro/pound: UP at 89.94 pence from 89.79
• West Texas Intermediate: DOWN 0.8% at $41.61 per barrel 
• Brent North Sea crude: DOWN 1.1% at $44.50 per barrel

– Rappler.com