Europe Weakens as Investors Gauge Damage
Europe stock markets weakened Wednesday, after a five-day rally, as investors gauge the extent of business damage from COVID-19. Investors are turning to the first-quarter earnings season to base their forecast of an economic rebound later this year.
The United Kingdom’s FTSE index was at 1.2% lower and France’s CAC 40 was 1.3% lower. Moreover, the DAX fell 1.6%.
The STOXX 600 Europe index climbed 2%. It surged almost 8% since April 6 on early signs the health crisis was ebbing. Also in hopes that lockdown measures would soon be lifted.
The benchmark index has recovered about 24% since hitting an eight-year low last month. However, it is still down about 22% from its record high. Analysts warn that an uptick in coronavirus cases could spark another sell-off.
French stocks fell as France became the fourth country to report more than 15,000 deaths due to the coronavirus. The first three countries to report more than the number were Italy, Spain and the United States.
Dutch navigation and digital mapping company TomTom lost 2.7%. This followed after saying it expected negative free cash flow and lower revenue from automotive and consumer businesses.
ASML Holding NV a Dutch maker of chip-making equipment, dropped 2.2% after its first-quarter results came in. This was at the lower end of its revised guidance.
Europe and Global Stocks Fall Due to the Pandemic
In the first World Economic Outlook report since COVID-19 began, the IMF estimated global GDP to shrink 3% this year. It is the worst economic downturn since the Great Depression of the 1930s. That further hit investors’ confidence.
Despite plans to lift restrictive measures in various countries to allow the economies to gradually restart, Europe still traded lower.
France has predicted an 8% contraction in its GDP. The U.K.’s Office for Budgetary Responsibility said Britain’s economy could fall by 35% this spring. That could happen with the budget deficit blowing out to over 100 billion pounds or $125 billion.
Stock trading reports, Smurfit Kappa Group ‘s shares fell 1.4% after the packaging company suspended its final dividend for 2019.
Shares in Jupiter Fund Management slumped 7% after it said that total assets under management decreased sharply during first quarter. This was a result of market movements and 2.3 billion pounds in net outflows of client funds.
In other news, oil prices have fallen on Wednesday. This was amid skepticism that OPEC’s plan for deep global cuts in output will be followed through.
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