By Barbara Kollmeyer, MarketWatch
AFP via Getty Images
European stocks were set to break a two-session winning streak on Friday, after a European Union summit failed to agree on a much-needed stimulus package and amid doubts over a promising coronavirus treatment from Gilead.
But helping pare losses were gains for Nestlé, the most heavily weighted stock in the main index.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +1.68% slipped 0.4% to 331.58, and is set for a 0.6% loss for the week, after two straight weekly gains. The index is up around 19% from a 52-week low of 279.66 on March 18, 2020. The German DAX /zigman2/quotes/210597999/delayed DX:DAX +2.04% dropped 0.7%, while the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +2.41% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +1.71% fell 0.5% and 0.7% each.
EU leaders signed off an already-agreed €500 billion ($542.15 billion) coronavirus response, but failed to make headway on a longer-term recovery plan that could reach a trillion dollars. That is as European Central Bank President Christine Lagarde warned that region’s economy could contract up to 15% this year in a worst-case scenario, according to a report in The Wall Street Journal .
“For the pessimist, it kicked the can a little bit down the road, asking the European Commission to work on details of a European Recovery plan to be presented at the next Eurogroup in a few weeks. For the optimist, it put trillions on the table without conditionality, and said there would be ‘a sound balance between loans and grants.’ For the cynical, it was vague with details,” said Agnès Belaisch, chief European strategist at Barings, in a note to clients.
Lagarde’s warning came amid a slew of downbeat data. The German Ifo survey of business confidence slid to 74.3 in April from 85.9 points in March, the biggest drop on record. “The corona crisis hits the German economy with full force,” said Ifo.
That comes on the heels of downbeat European purchasing and services managers surveys released Thursday.
U.K. data released Friday showed retail sales slid 5.8% in the 12 months ending March, the worst on record.
U.S. stock futures indicated a higher start for Wall Street, after Thursday’s rally was squashed by a report suggesting that Gilead’s /zigman2/quotes/210293917/composite GILD -0.73% hoped-for coronavirus treatment remdesivir wasn’t effective in early China trials. The company countered that the results weren’t conclusive, with its own clinical trial due for release at the end of the month.
Late on Thursday, the U.S. House of Representatives passed a much-awaited $484 billion coronavirus aid package that includes a second round of funding for small businesses.
Shares of heavily-weighed Nestlé /zigman2/quotes/210131093/composite NSRGY -0.34% /zigman2/quotes/208115528/delayed CH:NESN +0.17% rose over 1%, after the Swiss-based food giant’s first-quarter organic sales growth of 4.3% came in ahead of consensus, and the company stuck to 2020 guidance.
“While pantryloading will have helped (and won’t repeat) the breadth and depth of progress is impressive, with the implication that NESN are having a much better war than ULVR, thus far,” said Martin Deboo and a team of analyst at Jefferies.
Shares of Burberry /zigman2/quotes/205386705/delayed UK:BRBY +4.22% fell 3%. The company said on Friday that board directors and senior management would take voluntary pay cuts to help the company preserve liquidity amid the coronavirus crisis.
Sanofi shares /zigman2/quotes/201967021/composite SNY +0.04% /zigman2/quotes/206928357/delayed FR:SAN +1.05% shook off earlier losses and rose 1.7%. The French pharmaceutical giant reported higher first-quarter sales, largely due to pandemic-driven stockpiling of prescription drugs, strong demand for flu vaccination and over-the-counter cough and cold drugs due to the pandemic.
Leading decliners on Friday were shares of Lufthansa /zigman2/quotes/205496028/delayed DE:LHA +7.08% , which fell over 8% after the German airline warned that it has around €4.4 billion in liquidity, but expects cash to sharply decline in the coming weeks.
The company said it is in “intensive negotiations” with the governments of its home countries for financial assistance. Lufthansa was downgraded to sell at Credit Suisse. Air France-KLM /zigman2/quotes/205396176/delayed FR:AF +2.24% was also cut to sell. Those shares fell 1.5%.