By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
European stocks fell Wednesday, as a meeting of finance ministers ended with no agreement on a response to the economic crisis caused by the coronavirus outbreak, and amid grim economic forecasts for France and Germany.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -1.45% fell 1% to 323.30. The early losses threaten to break a two-session streak of gains, with Tuesday’s session ending in 1.88% gain. Elsewhere, the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -1.88% fell 1.3% as investors continued to watch for updates on the health of British Prime Minister Boris Johnson, who has been in intensive care since Monday after his coronavirus symptoms worsened.
European stocks slipped on the heels of a weak U.S. session on Tuesday. Dow industrial futures /zigman2/quotes/210407078/delayed YM00 -0.15% were last up 14 points to 22,502 in what has been a choppy trading so far.
The French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -2.16% slid 1.9% after the Bank of France predicted a 6% slump in first quarter gross domestic production — the biggest fall since the World War II.
A joint forecast from 5 leading German institutions said the pandemic will cause the country’s economy to shrink by 4.2%. It sees the German economy slumping 9.8% in the second quarter, the worst figure ever recorded since quarterly accounts were tracked in 1970, with a rebound of 5.8% next year. The German DAX index /zigman2/quotes/210223310/composite DAX +1.66% fell 0.8%.
Meanwhile, a Eurogroup of finance ministers meeting ended in the early hours of Wednesday after 16 hours of talks and no agreement on a united approach to shouldering the burden of the virus’s fallout. Among the areas of contention, countries like Italy and Spain would like to see issuance of eurozone debt, but the Netherlands and Germany have resisted. There were also rifts over the conditions attached to credit lines from the European Stability Mechanism - the EU agency that provides financial assistance to eurozone countries.
Globally, cases of the coronavirus continued to slow, though Tuesday marked the most global fatalities in a single day, which strategists at Deutsche Bank say has been taking place due to catching up from incomplete reporting over the weekend.
While the Chinese city of Wuhan, the epicenter of the outlook, has begun lifting travel restrictions and Italy is also starting to look at easing a strict lockdown as new deaths and cases start flattening out, New York reported the highest deaths in a single day thus far.
Jasper Lawler, head of research at London Capital Group, said pandemic curves may not flatten in time for April deadlines set to review any lockdown measures, which means many countries will be enduring another three weeks of restrictions.
“An extension of lockdowns and associated deeper economic hardship is probably priced in but raises the chance of a retest of the March lows in stock markets,” said Lawler, in a note to clients.
As for stocks on the move, shares of TUI AG /zigman2/quotes/207049334/delayed UK:TUI +4.46% rose 9%. The U.K.-listed travel group said it signed a 1.8 billion state-aid bridging loan with the German government to help it weather the coronavirus downturn.
Major oil companies acted as a weight on the index, with shares of BP PLC /zigman2/quotes/207305210/composite BP -1.00% /zigman2/quotes/202286639/delayed UK:BP -4.21% and Royal Dutch Shell Group PLC /zigman2/quotes/205095589/composite RDS.A -0.19% /zigman2/quotes/206428183/delayed UK:RDSA -3.23% down 3.5% and 2.5%, respectively. Crude oil /zigman2/quotes/209723049/delayed CL00 +2.96% was rebounding as investors looked ahead to a meeting of OPEC + leaders on Thursday that could end in a production cut. That’s after crude prices fell sharply on Tuesday.
London-listed insurers were also weak. Shares of Aviva PLC /zigman2/quotes/210517151/delayed UK:AV -8.17% slid over 8% and Direct Line Insurance Group PLC /zigman2/quotes/201952264/delayed UK:DLG -6.79% fell nearly 7% after the companies said their boards will withdraw final dividends due to the coronavirus after instructions from regulators. RSA Insurance Group PLC /zigman2/quotes/207445981/delayed UK:RSA -2.68% said it would do the same, but shares fell just 3%.