Europe Stocks Wipe Out 4-Month Rally in 5 Days Amid Virus Scare

This post was originally published on this site

(Bloomberg) — European shares on Wednesday wiped out what was left of the sharp gains made since late October, extending the rout into a fifth day as the coronavirus spread in the region and companies from Diageo PLC (LON:) to Danone (PA:) warned the outbreak will hit sales.

The Index tumbled as much as 2.9%, extending its weekly drop to 8.2% — the biggest slump since the heat of the euro-area’s sovereign-debt crisis in August 2011 — before trimming losses. The benchmark was down 0.9% as of 11:56 a.m. in London.

“Investors don’t like unpredictable things and the virus is very unpredictable,” Raphael Pitoun, an equities fund manager at CQS, said by phone. “If the virus doesn’t stop and there are new epicenters emerging that are critical to the world economy, I don’t think anyone is going to say that this was a healthy market correction.”

Italy reported 19 more coronavirus cases from the Lombardy region on Wednesday, France reported three new cases including a 60 year-old French man who died overnight in a Paris hospital, while 700 people were still confined to a hotel in Tenerife. The spread of the virus outside of China in the past week has revived worries over the potential impact on economic growth corporate earnings.

“The coronavirus outbreak is challenging as it is both a supply side and a demand side shock,” said Mark Phelps, chief investment officer of global concentrated equities at AllianceBernstein in London. “Clearly China is much more integrated into the global economy that during previous outbreaks, particularly in Europe. This means the virus is likely to have a greater impact on Europe than the U.S.”

Travel stocks plunged again on Wednesday, with Ryanair Holdings Plc (LON:) falling 4.4% and InterContinental Hotels Group Plc (LON:) dropping 2.3%. The Stoxx travel and leisure index has tumbled 12% since Feb. 19, the most among industry groups.

“The point here is that the market has just realized that the EU is not ready to contain the infection,” Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano, Switzerland.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment