European Stocks Record Their Worst Week Since 2008 on Virus Woes

(Bloomberg) --

European equities tumbled on Friday and marked their worst week since the 2008 financial crisis as investors fretted about the potential hit to the global economy from the spreading coronavirus.

The Stoxx 600 Index ended the day 3.5% lower, extending losses as U.S. stocks also fell. The travel and leisure sector slumped as much as 3.6%, with the gauge down 18% since the beginning of the year. Other sectors with exposure to China also declined, with the basic resources index down 3.7%.

Companies are beginning to give an early picture of the possible impact the virus might have on their businesses. British Airways-owner IAG SA fell 8.4% after saying it’s now impossible to predict earnings this year, and EasyJet Plc highlighted a softening in demand and said it plans to cancel flights. Elsewhere Amadeus IT Group SA, which operates software for flight bookings, dropped as much as 5.3% after saying that airline travel sales are slowing globally, though the stock later recovered its losses.

“The next couple of weeks will be where analysts really start to try to get their head around what the impact is on shares and companies’ earnings for the course of this year,” Chris Dyer, director of global equity at Eaton Vance, said by phone. “That could, from our perspective, lead to some opportunities to add to some selected names.”

A sell-off across European equities has gathered pace this week as new cases of coronavirus infections continued outside of China, with California monitoring 8,400 people after they traveled to Asia. European stocks have fallen 13% since last week’s record high, and posted a loss of 8.5% in February.

“It’s important to try to isolate yourself and don’t fall into the general fear,” said Tomas Garcia, portfolio manager at Andorra-based MoraBanc Asset Management. “After a week like this you don’t get to rest over the weekend. It’s impossible to switch off as you know you have clients’ money invested.”

--With assistance from Macarena Munoz.

To contact the reporter on this story: Kit Rees in London at krees1@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Jon Menon

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