Europe Stocks Suffer Longest Drop Since July as Virus Hits Home

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© Reuters. Europe Stocks Suffer Longest Drop Since July as Virus Hits Home© Reuters. Europe Stocks Suffer Longest Drop Since July as Virus Hits Home

(Bloomberg) — European shares dropped for a fifth day in a row as companies including Diageo Plc warned the coronavirus outbreak will hit their sales in China while worries mounted over the economic impact of the outbreak in Europe.

The Index sank 2.4% and hit its lowest level since late October, suffering its longest losing streak since July. Europe’s benchmark is now down 9% from its February peak, and falling below its 200-day moving average for the first time since October.

Diageo (LON:) lost as much as 2.8% after warning that the coronavirus will reduce its sales by as much as 325 million pounds ($422 million) this year. Air France KLM (PA:) was down 2.9% and Ryanair Holdings plc (LON:) slumped 4.7%. The dropped below the level of 7,000, falling to its lowest point in more than a year.

European equities started this week with the worst two-day drop since the Brexit aftermath in June 2016 amid increasing concerns that the spreading virus in Europe and Asia will curb global growth and impact corporate earnings and supply chains. The stock market is coming down from a record high reached last week as some investors mull whether the rally has gone too far.

“The ‘buy the dip’ culture is fading as investors realize that it is possibly just a matter of time before an outbreak will happen in another large western country or city,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano, Switzerland. “We cannot rule out further downside if the virus continues to spread across the world as predicted by many experts.”

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