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Europe stock markets cautious after Wall Street sell-off

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The FTSE 100 traded flat, while the DAX and CAC 40 were both down 0.1%

European equity traders were in a cautious mood on Friday, following a late sell-off on Wall Street overnight.

Stocks tanked in late trade in New York after markets had closed in Europe. Tech stocks led the rout, with the Nasdaq closing down 2%.

While there was no specific impetus to the selloff, there were a couple of negative headlines that may have reinforced the week-old risk-off sentiment, said Jim Reid, a senior strategist at Deutsche Bank.

A slimmed down US stimulus bill failed to pass the Senate (somewhat expectedly), and Microsoft announced that they had detected new cyberattacks targeting the US elections, he said.

Wall Street looked set for a modest rebound when trading resumed in New York later today. S&P 500 futures were trading up 0.7%, Dow Jones futures had gained half a percent, and Nasdaq futures were 1.1% higher.

Against this backdrop, European markets suffered a tepid open. The FTSE 100 fell briefly before trading flat, while the DAX and CAC 40 were both down 0.1%.

Reid said rising European COVID-19 cases were another concern for investors in the region.

Yesterday was the first time since early spring that new daily cases in the European Union and the U.K. surpassed those in the US, he said.

After a rout for the pound on Thursday driven by Brexit tensions, sterling found a floor on Friday morning. The pound was up 0.1% against the euro in early trade to €1.0843 and up 0.2% against the dollar to $1.2837.

Data published on Friday morning showed the UK economy grew by 6.6% in July, which was a slowdown from the growth seen in June.

Asian markets rallied overnight. Japan’s Nikkei gained 0.7%, the Hong Kong Hang Seng rose 0.6%, the Shanghai Composite added 0.8%, and the Shenzen Component climbed 1.5%.

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