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Europe Lockdown Fears Trigger Worst 3 Months Stocks Sell-off

European stocks were headed for their worst fall in three months on Monday as fears that a second wave of COVID-19 infections would lead to new social distancing measures hit travel and leisure shares and banks amid a new dirty money scandal.

There could be up to 50,000 new cases per day in Britain by the middle of October if the epidemic continues at its current pace, the country’s chief scientist adviser warned amid speculation over new “stay-at-home” orders from the government.

“I think they’re (investors) clearly nervous on chances of a second lockdown”, said Jane Shoemake, an investment director at Janus Henderson.

London’s FTSE 100 was the worst-hit blue chip index in Europe, falling bout 3.5% with UK-focused midcaps in the FTSE 250 dropping over 4%.

The pan-European STOXX 600 was down 2.9%, a fall not matched since the beginning of June.

Europe's travel and leisure index fell 5.7%, its worst drop since April with airlines such as BA owner IAG retreating 13.5% or Lufthansa 8%.

European banks fell over 6% just a few points from a record low following reports that banks such as HSBC and Standard Chartered were among those moving large sums of allegedly illicit funds over the past two decades.

HSBC’s shares in Hong Kong and Standard Chartered’s in London fell on Monday to their lowest since at least 1998 after media reports that they and other banks, including Barclays and Deutsche Bank, moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.

Barclays and Deutsche Bank, which were also mentioned in the reports, fell 5.6% and 5.8%, respectively.

Meanwhile, a report from China's state-run Global Times suggested that HSBC could be a possible candidate for inclusion in the country's "unreliable entity list" that targets foreign firms which violate Chinese laws or commit "illegal acts". 

Among other individual stocks, Britain's Rolls-Royce Holdings slumped 9.6% after the aero-engine maker said it was looking to raise up to 2.5 billion pounds ($3.2 billion) in an effort to strengthen its balance sheet.

German telecom 1&1 Drillisch dropped 28% after warning that an increase in the cost of its network access deal with Telefonica Deutschland would hit profits this year. Its parent United Internet fell 26.1%.

Adding to recent string of M&A activity, Play Communications soared 37.2% after French telecoms group Iliad said it plans to acquire the Polish mobile phone operator in a 3.5 billion euros ($4.15 billion) deal. Iliad slipped 2.3%.

Reporting by Sruthi Shankar in Bengaluru and Julien Ponthus in London; Editing by Shounak Dasgupta and Ed Osmond

Source: Reuters

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