European shares end 2020 in a slump

Friday, 1 January 2021 00:00 - - {{hitsCtrl.values.hits}}

LONDON (Reuters): European shares fell on Thursday as lockdowns and rising COVID-19 cases overshadowed the optimism around the rollout of vaccines in the New Year, while the dollar fell to a two-and-a-half-year low.

Trading volumes were thin, with many traders away on New Year’s Eve and major European markets closed. Where markets were open, they failed to follow their Asian peers higher.

UK’s FTSE 100 fell 1.7% and France’s CAC 40 0.4%. US stock futures were 0.15% lower, pointing to a weaker open on Wall Street.

Despite a stimulus-charged rebound since the pandemic-induced market slump in March, most European markets have underperformed the United States and Asia, where a series of record highs have been reached.

The pan-European STOXX 600, which was closed on Thursday, recorded a 3.8% drop in 2020 as a rapid surge in coronavirus cases and worries about Brexit curbed improving sentiment.

Still, despite the rising COVID-19 cases and increasing unemployment, investors were betting the rollout of vaccines in 2021 will unleash an economic rebound spurred by plentiful fiscal and monetary cash.

Among the biggest developments in markets in 2020 has been the dramatic drop in the dollar. On Thursday, it hit its lowest since April 2018 and is now down 7.2% against a basket of currencies, its worst annual performance since 2017.

The dollar’s weakness, driven by bets that the Federal Reserve will keep interest rates very low, has helped rival currencies.

The euro has been a big beneficiary and is up 10% in 2020 and was above $ 1.23 on Thursday.