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Top 5 Things to Know in the Market on Friday, August 14th

imageEconomy14 hours ago (Aug 14, 2020 06:43AM ET)

(C) Reuters.

By Geoffrey Smith — Fears of a second wave of Covid-19 in Europe spread as the U.K. imposes a quarantine on travelers from France and Holland. Unrest in Belarus and fears of possible Russian intervention add to the nerves to send European stocks tumbling and weigh on U.S. futures, too. July retail sales are expected to confirm a flattening out of the economic recovery. The publisher of Fortnite sues Apple (NASDAQ:AAPL) and Google after it dropped the game from their app stores in a move to defend their sales commissions. And the Senate has gone on vacation rather than wait for the House and the administration to agree on a stimulus package. Here’s what you need to know in financial markets on Friday, August 14th.

1. European markets tumble on Covid fears, Belarus unrest

European stock markets fell sharply after the U.K. imposed a two-week quarantine on people arriving from France and the Netherlands, in response to recent sharp increases in the rate of new Coronavirus infections in those countries.

The quarantine announcement overshadowed a further loosening of restrictions on domestic business in the U.K.

Adding to the nerves was a wave of strikes across Belarus in protest at the alleged rigging of last weekend’s presidential election by incumbent Alexander Lukashenko. His opponent, Svetlana Tikhanovskaya, was forced into exile earlier this week by the country’s security services. EU foreign ministers are meeting later Friday to discuss the issue, mindful of the risk of Russian intervention

By 6:30 AM ET (1030 GMT), the benchmark Euro Stoxx 600 was down 1.6%, also hit by figures showing that eurozone GDP fell by 12.1% in the second quarter. The worst hit stock market was non-eurozone Poland, which borders Belarus to the west.

2. Retail sales data due as Senate goes on vacation

Is the U.S. economic recovery intact or not? After much debate over whether jobless claims data on Thursday gave a too flattering picture of the labor market, the U.S. is set to release retail sales data for July at 8:30.

The figures are unlikely to show much sign of consumer sentiment weakening ahead of the expiry of enhanced unemployment benefits at the end of the month, as the cut-off date for the sample fell before the deadlock in Congress over the fourth stimulus package became a major talking point.

Even so, sales are expected to have risen only 1.9% from June, consistent with a pattern visible everywhere in recent data that shows the rebound in activity flattening out.

Overnight, Chinese data showed industrial production falling short of expectations for the first time since lockdowns were lifted, while retail sales still remained below last year’s levels.

3. Stocks set to open lower

U.S. stock markets are set to open lower ahead of the retail sales release, hit not only by the news out of Europe, but also by the continued game of hardball between House Democrats and Republicans in the Senate and the administration.

The Senate adjourned for its summer recess on Thursday, after negotiators made no progress in bridging the gap between the respective proposals on what to include (or not) in the next round of economic relief measures. Senate Leader Mitch McConnell said the chamber could be recalled for a vote if necessary.

By 6:30 AM ET, the Dow futures contract was down 140 points or 0.5%, while the S&P 500 futures contract was down 0.3% and the Nasdaq 100 futures contract was down 0.1%.

4. Fortnite publisher takes on Big Tech

Epic Games, the publisher of blockbuster video game Fortnite, sued Google and Apple after the two tech giants Fortnite from their app stores in an effort to defend their hefty commissions for in-game purchases.

Epic had tried to roll out a new way of making in-app purchases to avoid paying hefty fees to the two companies (The Wall Street Journal reported those commission are 30%).

The move comes against a backdrop of increasing scrutiny of the tech giants’ policies with regard to control of their operating sytems. The EU, which has already fined Alphabet (NASDAQ:GOOGL) for abusing its control of the Android system to squeeze out third-party apps, opened an antitrust investigation into possible abuse of the iPhone App Store by Apple in June.

5. Oil prices fall on U.K. quarantine news

Crude oil prices fell as the latest Covid-19 developments in Europe pointed to a fresh hit to fuel demand.

By 6:40 AM, U.S. crude futures were down 0.5% at $42.02 a barrel, while the international benchmark Brent was down 0.4% at $44.77 a barrel.

France is the world’s biggest tourist destination country, and the U.K.’s new restrictions triggered sharp falls in European airline stocks on Friday.

Top 5 Things to Know in the Market on Friday, August 14th