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Europe Stocks Hit Late-May Lows as Lockdown Fears Rattle

Losses accelerated across European stock markets on Wednesday, with the benchmark STOXX 600 tumbling to its lowest level since late-May on fears of a new national lockdown in France and tighter curbs elsewhere to combat a surge in coronavirus cases.

The pan-European STOXX 600 index fell 2.4%, while Germany's DAX and France's CAC 40 both plunged 3.3% and UK's FTSE 100 dropped 2.2%.

The French government has been exploring a new, national lockdown from midnight on Thursday, BFM TV reported, albeit a slightly more flexible one than the two-month shutdown that began in mid-March.

President Emmanuel Macron will give a televised address later in the evening, his office said.

Meanwhile, German Chancellor Angela Merkel wants to close all restaurants and bars from Nov. 4 according to a draft resolution seen by Reuters, while the Telegraph newspaper reported British Prime Minister Boris Johnson is under pressure for a new lockdown.

“Global markets look incredibly nervous, the mix of rising COVID-19 cases and deaths and the potential full lockdown in France, add this to the uncertainty ahead of the U.S. elections and you have a very poor backdrop,” said John Woolfitt, director of trading at Atlantic Capital Markets.

“I don’t expect this to be long-term, but nervousness will continue until elections are done and some form of steadying in the COVID-19 numbers.”

Economically sensitive sectors such as automakers, banks and insurers led declines, falling between 3.9% and 4.4%.

U.S. futures also slid over 1% as investors stayed on the sidelines with no stimulus package in sight and just a week to go before the U.S. presidential election.

The downbeat mood overshadowed a batch of upbeat quarterly results from European companies.

Deutsche Bank AG reported a surprise swing into quarterly net profit and upgraded the revenue outlook for its investment bank, but its shares fell 4.2%.

Carrefour delivered its strongest quarterly underlying sales growth for at least two decades. Shares of Europe's largest retailer, however, dropped 2.5%.

German online takeaway food company Delivery Hero was among the few gainers, up 4.1%, after it raised its guidance for 2020 sales for the second time this year.

Reporting by Sruthi Shankar in Bengaluru and Thyagaraju Adinarayan in London; Editing by Sriraj Kalluvila

Source: Reuters


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