Europe Stocks Fall Anew on Virus Concern After Brief Respite
Europe Stocks Struggle Again With Uncertainty ‘Likely Near Peak’
(Bloomberg) --
European stocks struggled to find a floor to the current market sell-off as losses resumed on virus worries after Tuesday’s brief respite.
The Stoxx Europe 600 Index was down 3.9% at the close of trading, pacing losses in the U.S. and Asia. Banks trimmed some declines in the afternoon as euro-area officials were said to be looking at activating the region’s bailout fund, a crucial step toward triggering the European Central Bank’s most powerful bond-buying powers.
Oil-and-gas shares led the broad retreat across European sectors, down 9.8% after crude prices slumped to an almost 18-year low as Saudi Arabia ramped up a price war.
Stocks in Europe, where the number of coronavirus cases has now surpassed those of China, have plummeted since last month’s peak as concern about the outbreak’s impact on growth and earnings has mostly overshadowed monetary and government easing measures.
“Familiar hedging strategies to mitigate risks have become ineffective,” said Ostrum Asset Management strategist Axel Botte. Market liquidity in credit is extremely limited, especially if one wants to sell, he added.
Despite the day’s losses, the Stoxx 600 remained above an intraday low hit on Monday. Strategists at Barclays Plc advised that investors stay put as fear reigns about the pandemic’s spread, while uncertainty is “likely near peak levels.”
“There is no circuit breaker to kill extreme volatility,” strategists led by Emmanuel Cau wrote in a note. “Uncertainty is likely near peak levels, technicals are deeply oversold and bear market rallies could be sharp. We advise staying put for now.”
Among European sectors, travel and leisure shares have been hit hardest in the sell-off. The sector slid a further 7.4% on Wednesday.
Retailers retreated the least, with U.K. supermarkets including Marks & Spencer Group Plc, J Sainsbury Plc and Colruyt SA among the top gainers. That was even as the pound slipped to its lowest level against the dollar in over three decades amid coronavirus worries.
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