(Reuters) – European stocks fell on Friday as widespread fears of the coronavirus hamper activity, with oil and gas stocks suffering the brunt of losses after the sharp drop in crude prices.
The DAX graph of the German equity price index is illustrated on the Frankfurt Stock Exchange, in Germany, on February 6, 2020. REUTERS / Staff
The pan-European STOXX 600 closed down 3.7% at its lowest point since mid-August 2019, ending in red for the third consecutive week after global coronavirus cases exceeded 100,000, economic damage is worsening as more and more countries impose restrictions to curb its spread.
While the STOXX 600 had briefly won this week following a cut in emergency rates by the US Federal Reserve, concerns about the impact of the virus quickly bypassed the markets.
“The problem people have in situations like this is that it’s very difficult to know when the bottom will come,” said Craig Erlam, senior market analyst at Oanda in London.
“The worst is not yet behind us, because it always seems that we are in the early spread phase in many countries. If we see policy makers providing incentives, it suggests that even they think there could be significant damage. ”
Oil and gas stocks .SXEP ended the day down more than 5%, their worst day in more than three years, as oil prices fell to their lowest level since 2017 after Russia rejected a sharp drop in OPEC production. Crude oil prices were already under pressure due to falling global demand. [O/R]
Tullow Oil PLC, listed in London (TLW.L) was the worst performer in the sub-index, losing around 15%.
The .SX7P banking index underperformed its peers of the week, losing around 8.8%. The index hit its lowest point since 2009 in the midst of a flurry of virus-related turmoil and falling bond yields.
German Bank (DBKGn.DE) fell 3.8% and Commerzbank (CBKG.DE) fell 7.2% as the flight to security pushed the 10-year German Bund’s yield to record levels. [GVD/EUR]
Planemaker Airbus (AIR.PA) plunged 7.6% as it failed to secure new aircraft orders in February – further evidence of disruption in the aviation industries due to the spread of the coronavirus.
Several regional sub-indices were trading on the territory of the bear market.
Investors have almost fully assessed the price in a drop of 10 basis points from the European Central Bank next week. However, a recent survey by economists at Reuters showed that the ECB will not cut rates, highlighting the central bank’s limited policy options, since its deposit rate is already at 0.50%.
Infineon Technologies AG (IFXGn.DE) fell 5.5% after US officials recommended blocking the $ 10 billion deal proposed by the German chipmaker to buy Cypress Semiconductor Corp (CY.O) on security risks.
Among the rare winners, the car manufacturer Continental AG (CONG.DE) and the airline company Air France (AIRF.PA), the two posted modest gains for the day as they recovered from their multi-year lows.
Sruthi Shankar’s reports to Bengaluru; Editing by Sriraj Kalluvila