European Stocks Retreat After Week of Gains on Fresh Virus Woes

(Bloomberg) -- European equities dropped at the start of the week on concerns about the spreading of new coronavirus infections.

The Stoxx Europe 600 Index fell 0.8% as telecoms, food and oil sectors retreated. Carnival Plc tumbled 10% after major cruise lines agreed to suspend voyages from U.S. ports until Sept. 15. Wirecard AG lost 44% after saying the missing 1.9 billion euros ($2.1 billion) of cash on its balance sheet probably doesn’t exist. Deutsche Lufthansa AG fell 3.2% after the company said its bailout plan is at risk.

European equities rallied last week on the optimism of strong stimulus measures and as China’s Beijing Covid-19 outbreak appeared to fade. However, concerns persist about a possible second wave of coronavirus infections, with California reporting record new cases and Florida infections jumping more than the weekly average. Germany’s infection rate rose for a third day with outbreaks at a meat plant and housing complexes adding to the tally

“With the upcoming reporting season, continuing geopolitical and trade uncertainties, the ongoing corona crisis and the U.S. presidential election due in early November, there are a lot of stumbling blocks ahead,” said Ulrich Urbahn, head of multi-asset strategy and research at Joh Berenberg Goss. “At the same time, the market is supported by the fact that many bears remain underinvested in equities, in addition to the support from central banks.”

Berenberg’s multi-asset team slightly reduced its overweight in equities at the start of June and has hedges in gold and U.S. Treasuries.

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