Fri 06 March 2020 – 06:10
[BENGALURU] European stocks interrupted a three-day gain streak on Thursday as concerns over the extent of economic damage from the coronavirus epidemic outweighed optimism about supporting monetary stimulus.
Resources were the underperforming sector, as several heavyweight miners, including BHP Group and Rio Tinto, traded ex-dividend. The two stocks lost about 6% and 7% for the day, respectively.
The main European equity benchmark ended down 1.4% after the number of deaths from the epidemic reached over 3,300, as several other companies issued profit warnings due to disruption caused by the coronavirus.
Hopes of several major central banks to revive the impact of the epidemic had stabilized the index this week, but questions remained as to whether central banks would be able to fully house the major economies.
Analysts firmly expect the European Central Bank to cut interest rates by 10 basis points next week.
“At 10 basis points, a drop in interest rates does practically nothing for the economy. It is more a signal to the market that the ECB is ready to act and also, it will probably be accompanied by a message that they are studying more targeted measures, “said Elwin de Groot, head of macro strategy at Rabobank in Amsterdam.
Travel and leisure inventories fell 2.9%, the sector being among the most affected by the virus.
Airline inventories fell after the collapse of British regional airline Flybe, making the troubled carrier the industry’s first major victim.
British commercial broadcaster ITV fell 12% after warning that advertising revenue for April could drop by around 10% as travel agencies postpone their campaigns.
German car supplier Continental fell 12.4% after posting a net loss of 1.2 billion euros ($ 1.85 billion) in 2019, as the broader automaker index fell 3, 4%.
The heavy bank HSBC fell 1.2% after sending over 100 of its employees to London after a worker tested positive for the coronavirus.
Larger bank stocks retreat amid steadily falling bond yields
The rating agency Fitch said Thursday that the spread of the coronavirus in the EU opens new channels for it to affect the regional economy and accentuate its negative impact on GDP growth.
Elwin of Rabobank said the EU would likely have two quarters of zero to negative growth, with some countries showing negative growth in 2020.
Among the actions in the dark was the German food delivery company Hellofresh, who was one of the top winners of the Stoxx 600 after JPMorgan improved the stock.
REUTERS