Sat 07 March 2020 – 06:01
[BENGALURU] European stocks fell on Friday against the backdrop of widespread fears that the coronavirus would hamper trade, with oil and gas stocks suffering the brunt of losses after a sharp drop in crude prices.
Pan-European Stoxx 600 closed 3.7% to its lowest point since mid-August 2019, ending in red for the third week in a row after global coronavirus cases surpassed 100,000 damage economic conditions worsening as more and more countries imposed 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 is 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, as we still have the impression of being in the early propagation phase in many countries. If we see policy makers providing incentives, this suggests that even if they believe that there could be significant damage. “
Oil and gas stocks finished more than 5% lower for the day, 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 (Organization of Petroleum Exporting Countries) production. Crude oil prices were already under pressure due to falling global demand.
Tullow Oil PLC, listed in London, was the worst performer in the sub-index, losing around 15%.
The bank index underperformed its peers for 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.
Deutsche Bank fell 3.8% and Commerzbank slipped 7.2% as the flight to security pushed the 10-year German Bund’s yield to record levels.
Planemaker Airbus 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 almost fully priced the price down 10 basis points from the European Central Bank (ECB) next week. However, a recent survey of Reuters economists has shown that the ECB will not cut rates, highlighting the central bank’s limited policy options, since its deposit rate is already negative at 0.5%.
Infineon Technologies AG fell 5.5% after US officials recommended blocking the $ 10 billion deal proposed by the German chipmaker to buy Cypress Semiconductor Corp on security risks.
Among the rare winners, automaker Continental AG and airline Air France both posted modest gains for the day as they recovered from their lowest level over several years.
REUTERS
