European Markets Slide on Virus Concerns and Vaccine Shortage

European Markets Slide on Virus Concerns and Vaccine Shortage

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Key Takeaways

• European stocks search for direction on Friday
• Vaccination hassles continue to rattle the euro area economy

European equities slid in the early hours on Friday pushed lower on renewed coronavirus concerns and prolonged vaccine shortfalls. The UK’s FTSE100 slipped out of the gate, declining by about 0.30%, while the German DAX dropped by 0.20%. The French CAC40 is floating near flat levels on the day.

In the UK, the government decided to restrict the AstraZeneca vaccine for people under 30 after alarming cases of deadly blood clots. The decision to limit the vaccine landed another blow on AstraZeneca’s reputation. The drugmaker recently faced investigations over the efficacy and the potential threats of the vaccine. AstraZeneca’s vaccine has already been administered to tens of millions of people in more than 70 countries around the globe. The UK government, however, said the vaccine campaign across the country will not be affected by the restriction as it has secured enough doses to keep the vaccination pace on track.

Boris Johnson, the British Prime Minister, said the UK has “no reason at this stage” to extend the lockdown after the summer. The country is set to gradually reopen the economy by the summer.

The European Medicines Agency stated that the “benefits of the vaccine still outweigh the risks despite a possible link to rare blood clots.” Following the announcement, AstraZeneca confirmed that the opinion is in line with the vaccine’s characteristics and benefits. “We trust that, after the regulators’ careful decisions, vaccinations can once again resume across Europe,” said AstraZeneca’s chief medical officer, Ann Tayler, while the head of the EU agency, Emer Cooke, stated, “If it were me, I would be vaccinated tomorrow”.

Several European countries already announced they would resume giving AstraZeneca vaccinations to their nations on Friday or early next week. France, Italy, Spain, Portugal, Germany, the Netherlands, Greece and Belgium have confirmed they will restart the vaccination program using AstraZeneca. Some EU countries, however, including Sweden and Norway, said they are making their own investigations and will decide at a later point if they will continue administering the vaccine. Countries outside Europe such as Australia, Canada and India are also renewing their AstraZeneca vaccination programs.

ECB Policymakers Concerned About Slow Vaccination Pace

Over to the European Union, the EU’s health agency, the European Medicines Agency, said it found no link between the AstraZeneca vaccine and the rare instances of blood clots. Against that backdrop, France, Germany, Italy, and a number of other EU member states have decided to resume administering the AstraZeneca shot after they temporarily halted vaccinations with it in March. By the end of March, Germany announced it would restrict the use of the AstraZeneca vaccine for people below the age of 60.

The sluggish vaccination pace among European countries has raised concerns at the ECB’s council. Members of the European Central Bank’s governing council warned the slow and uneven Covid-19 vaccination campaign is threatening to delay the bloc’s economic recovery from the pandemic.

In a meeting on Mar 11, the members of the governing council have questioned whether the lockdowns would be relaxed as the second quarter unfolds, according to the minutes released yesterday. “Members underlined the uncertainty surrounding the near-term growth outlook,” the report said.

“Reference was made to the slow pace of vaccination compared with other parts of the world. Questions were raised as to how realistic it was to assume that containment measures would be reduced as early as the second quarter and it was pointed out that, depending on the further evolution of the pandemic, weakness in activity might continue well into the second quarter and beyond.”

The members also noted that the medium-term growth outlook in the euro area “had become more balanced”, in contrast to the near-term, which still faces “downside risks”.

The minutes mentioned US President Biden’s stimulus package worth $1.9tn. The report states that the “impact of the Biden plan and the implications for the EUR/USD exchange rate were hard to quantify.”