European Stocks Come Closer to Correction as Virus Cases Mount

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© Reuters. European Stocks Come Closer to Correction as Virus Cases Mount© Reuters. European Stocks Come Closer to Correction as Virus Cases Mount

(Bloomberg) — The sell-off ripping through European equity markets intensified on Thursday as the cases of coronavirus outside China continued to rise.

The region’s benchmark is nearing a correction, with the Stoxx Europe 600 Index now down 8.9% since last week’s record high. The measure slid 2.3% as of 8:12 a.m. in London, with basic resources and travel and leisure industry groups lower, after the U.S. reported its first case of coronavirus that doesn’t have ties to a known outbreak.

Equities are plunging as the spread of the epidemic fuels fears about the impact on global growth and corporate earnings. More coronavirus cases were reported in countries other than China for the first time, the World Health Organization said.

“Given the recent volatility, fear is the dominant factor,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM EK. “In a very short period, we went from all-time high celebrations to panic mode. It’s too early to ‘buy the dip’ in my view and I expect investors to stay on the sidelines or increase cash.”

European equities have now wiped out all the sharp gains made since late October. The is on track for its worst week since August 2011. Stocks in , the heart of the outbreak in Europe, fell 2.2% on Thursday. stocks, last year’s big winners, are heading for one of the worst performances among global equity benchmarks this month.

Travel stocks tumbled yet again, down 3.3%. The sector has plunged the most among industry groups since Feb. 19.

Anheuser Busch Inbev NV (NYSE:)joined the chorus of companies warning about the impact of the epidemic, with the world’s largest brewer forecasting the steepest decline in quarterly profit in at least a decade due to the coronavirus. Its shares fell 5%.

“Investors should minimize their exposure to industrial commodities, luxury goods and European airlines,” said Seema Shah, chief strategist at Principal Global Investors. “We also favor quality stocks, especially large companies. “Defensive sectors such as utilities, real estate and health care are likely to do well in the equity markets compared to the broader markets.”

Seven companies including AstraZeneca Plc (NYSE:), Barclays Plc (NYSE:) and HSBC Holdings Plc (LON:) traded without the right to dividends today, shaving about 0.4 point off the and almost 28 points off the Index.

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