(Reuters) – European stocks ended the week down about $ 1.5 trillion in their worst weekly performance since the 2008 financial crisis, when the rapid spread of the coronavirus outside of China resulted in a sale supported by fear of a recession.
The DAX graph of the German equity price index is illustrated on the Frankfurt Stock Exchange, in Germany, on February 25, 2020. REUTERS / Staff
The pan-regional STOXX 600 index fell 3.5% on Friday, deepening its slide in the correction territory with a dip of 13.2% compared to a record reached Wednesday last week.
“Today’s move and the week-to-week movement is driven by systematic and self-executing flows. We have seen a significant reduction in our position (this week), “said Philipp Brugger, head of investment strategy at Union Investment.
All European sub-sectors were well in the red, with chemicals .SX4p, insurance .SXIP and telecoms .SXKP leading the day’s losses, losing more than 4% each.
BASF in Germany (BASFn.DE) was among the biggest percentage losers in the chemical sub-index after warning that profits could fall further this year.
Equities in the travel and leisure sector .SXTP largely underperformed their counterparts during the week, down around 18%.
Airlines were the hardest hit, with the situation escalating after British Airways owner IAG (ICAG.L) said its revenues would suffer a blow this year as the number of passengers fell.
The stock fell 8.4% on the day, while the other Easyjet PLC airlines (EZJ.L), Air France (AIRF.PA) and Lufthansa AG (LHAG.DE) going from 0.9% to 6.4%.
The shares listed in Milan .FTMIB fell 3.6%. On Friday, the number of people infected in Italy, the most affected country in Europe, exceeded 850.
German .GDAXI shares fell 3.9% as the number of cases in the country increased to 60. Insurer Munich Re (MUVGn.DE) was among the worst performers of the day after its fourth quarter profit decline.
The French publisher Lagardere SCA (LAGA.PA) hit the bottom of the STOXX 600 after announcing a drop in revenue for 2019. The cabinet also appointed former French President Nicolas Sarkozy to its advisory board.
Rolls-Royce engines and car manufacturer (RR.L) was among the few winners, finishing at 3.2% after declaring that it was well placed to deal with the disruption caused by the epidemic.
As investors heightened expectations for lower eurozone rates as early as June in response to the virus, two ECB politicians said on Friday that the bank did not need to take immediate action in response to the ‘epidemic.
“The ECB situation has the added challenge of not having as much powder and, in general, the threshold for them to move on the interest rate side is really high,” added Brugger of Union Investment.
The World Health Organization has warned that the virus has pandemic potential, and rating agency Moody’s has said it will trigger a global recession in the first half of the year.
Sruthi Shankar’s reports to Bengaluru; Editing by Sriraj Kalluvila, Emelia Sithole-Matarise and Frances Kerry