By Barbara Kollmeyer, MarketWatch
European stocks suffered through the largest weekly loss since the depths of the 2008 global financial crisis, as equities worldwide continued to sink on fears surrounding fallout from the coronavirus outbreak.
The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.15% closed 3.6% lower and finished down over 12% for the week.
The German DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -0.51% , French CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -0.33% and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.39% each dropped more than 3%. All of those indexes have now moved into correction territory.
Europe’s losses tracked declines across Asian markets and a grim day on Wall Street, where the S&P 500’s drop over six days has marked the fastest slide into correction territory from a recent peak since a two-day drop during the global financial crisis. The Dow industrials /zigman2/quotes/210598065/realtime DJIA -1.11% fell over 700 points in early trading.
“The problem is that once fear takes over, a 10% correction can become a 20% bear market in no time, so if you are going in you need to be prepared to take a hit instantly. Whilst around 10% moves are normal during bull markets, what’s been startling is the speed of the decline,” said Neil Wilson, analyst for Markets.com, in a note to clients.
Shares of International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG -1.80% was among the worst performing large-cap stocks, with the operator of British Airways and Iberia losing nearly 9%. The airlines operator posed a 40% fall in net profit for 2019 and said it can’t provide guidance for 2020 due to the coronavirus outbreak.
Analysts at Bernstein, who rate the company outperform, say they like IAG’s equity story in the long term, and any downturn would “reveal the strength of the IAG model. However, for investors to be able to take a position in the shares now, they will need to be confident in both the future path of the Covid-19 outbreak and the overall global macro outlook – which is of the company’s control,” said Daniel Roeska and Alex Irving.
Shares of Anglo-German travel group TUI /zigman2/quotes/207049334/delayed UK:TUI -1.53% also fell about 9%.
Shares of Germany’s BASF /zigman2/quotes/204280060/delayed DE:BAS +1.39% fell 4.9% after the chemical company reported a profit and sales fall for the fourth quarter and warned of a negative hit from the coronavirus for 2020.
Among stocks in the green — Rolls-Royce Holdings /zigman2/quotes/203646520/delayed UK:RR -1.27% , which rose after the engineering company said losses narrowed and its underlying profit rose in 2019.