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European Shares Dip as Business Activity Data Rolls Out

(Reuters) - European stock markets erased meagre early gains on Thursday as investors braced for worsening business activity data with the coronavirus outbreak battering the global economy, while Unilever slumped after pulling its full-year forecast.

European Shares Dip as Business Activity Data Rolls OutFILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, April 22, 2020. REUTERS/Staff/File Photo

The consumer goods giant fell more than 5% as it said it could not “reliably assess the impact” of the pandemic on its business, pulling the wider personal goods index down 1.1%.

The pan-European STOXX 600 index edged down 0.1%, with telecoms and the food and beverage indexes also among the biggest decliners.

Energy was a bright spot, jumping 2.6% as oil prices rebounded on signs of production cuts.

“With nascent signs the extreme selloff in oil prices is abating, it’s as if someone triggered the quick-release valve on the pressure cooker as the market is starting to feel so much more comfortable in its own skin,” said Stephen Innes, chief global markets strategist at AxiCorp.

The STOXX 600 has bounced this month after hitting eight-year lows in March as dramatic global stimulus and signs of easing in the coronavirus outbreak brought back bargain hunters, but analysts have warned against a quick recovery as the economic damage from a near shutdown in activity piles up.

French business activity plunged even more than expected to a new record low. Surveys on the euro zone’s manufacturing and services sector due later in the day are expected to mirror dismal readings from Asia.

All eyes will also be on a European Union summit later in the day, with the bloc’s leaders moving towards joint financing of a recovery by asking the European Commission to propose a fund that targets the most affected sectors and regions.

Across the Atlantic, data is likely to show U.S. jobless claims topping a stunning 26 million in the past five weeks as sectors ranging from autos to energy firms and industrials idle production and furlough staff.

Another jump in jobless claims “may prompt investors to reduce their risk exposure again, as this would signal that the wounds of the U.S. labour market are really deep,” said Charalambos Pissouros, senior market analyst at JFD Group.

Kicking off the first-quarter earnings season for the big European lenders, Credit Suisse Group AG posted a 75% jump in profit, but cautioned the pandemic could impact performance in coming quarters. Its shares rose 0.9%.

SKF, the world’s biggest maker of ball bearings, jumped 7.5% to the top of the STOXX 600 after reporting better-than-expected first-quarter operating earnings.

Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila

Source: Reuters

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