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June 10, 2020, 8:47 a.m. EDT

European stocks slip as investors wait to hear from Fed’s Powell

Gloomy outlook from OECD darkens mood for stocks

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By Barbara Kollmeyer, MarketWatch


AFP via Getty Images
A shopper wearing personal protective equipment, including a face mask as a precautionary measure against COVID-19, exits a reopened Zara shop in Grafton Street in Dublin, Ireland on June 8, 2020.

European stocks were headed for a third-straight decline on Wednesday, after a gloomy global growth outlook and as investors waited for the outcome of the Federal Open Market Committee meeting.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -0.66%  slipped 0.1% to 369.31, after rising 0.6% at the start, after Tuesday’s drop of 1.22%, which marked the biggest one-day percentage fall since May 29. The German DAX /zigman2/quotes/210597999/delayed DX:DAX -0.70%  reversed to fall 0.3%, on the heels of a 1.6% drop, while the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -1.22%  was flat and the FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.71%  fell 0.2%.

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0422%  inched up 0.1% to $1.1356.

U.S. stock futures turned mixed, after Tuesday’s 300-point loss for the Dow industrials /zigman2/quotes/210598065/realtime DJIA -0.88%  and a loss for the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.12% , though the Nasdaq /zigman2/quotes/210598365/realtime COMP -1.07%  logged another record close.

Some steam came out of the equities rally after the Organization for Economic Cooperation and Development warned the world economy is “on a tightrope.” The body predicted a 6% fall in gross domestic product this year, provided a second wave of the virus can be avoided. If the virus returns, before the end of this year, global GDP will fall 7.6%, the body predicted.

More gloom on the global economy may only deepen the debate among investors as to whether equities have risen too far, too fast since the March lows brought on by the pandemic.

“The perception remains that stocks appear to be a one-way bet, given the support being proffered by central banks, as well as various fiscal measures, with all eyes on the conclusion of today’s Federal Reserve rate meeting,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.

A Fed statement is expected at 2 p.m. Eastern Time (8 p.m. CET), followed by a press conference led by Chairman Jerome Powell. The central bank, which has thrown unprecedented financial support at markets, isn’t expected to reveal new support or change its dovish stance, but will unveil economic forecasts.

The European Central Bank, meanwhile, has set up a task force to look at the idea of a bad bank to warehouse unpaid euro debt to shield commercial banks from any second fallout from the crisis, Reuters reported.

On the data front, French industrial production plunged in April, while China’s factory-gate prices fell deeper into deflation in May.

Within company news, Inditex /zigman2/quotes/203681809/delayed ES:ITX -2.40%  was in the spotlight after the Spain-based owner of Zara and other retail chains said it swung to a first-quarter loss, with a sharp fall in sales due to the pandemic. But it also said trends were improving in May as many economies began to reopen, and announced plans to close 1,200 stores to help integrate its bricks-and-mortar and online businesses. Shares rose 1%.

Airbus /zigman2/quotes/208224336/delayed FR:AIR -3.54%  shares rose 1% after the French government on Tuesday revealed a €15 billion ($17 billion) rescue plan for the aerospace industry that includes €7 billion for Air France, which had previously been announced.

Shares of Air France /zigman2/quotes/205396176/delayed FR:AF -1.93%  sank 5.8%, alongside a similar drop for Deutsche Lufthansa /zigman2/quotes/205496028/delayed DE:LHA -3.13% . But shares of both companies have gained more than 20% this month as airlines have come back into favor amid hopes for an industry recovery sooner rather than later.

/zigman2/quotes/210599654/delayed
XX : STOXX
368.78
-2.45 -0.66%
Volume: 0.00
Sept. 18, 2020 11:03p
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/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,116.25
-91.87 -0.70%
Volume: 185,861
Sept. 18, 2020 6:30p
loading...
/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
4,978.18
-61.32 -1.22%
Volume: 279,158
Sept. 18, 2020 6:05p
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,007.05
-42.87 -0.71%
Volume: 1.54M
Sept. 18, 2020 4:56p
loading...
/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.1847
+0.0005 +0.0422%
Volume: 0.0000
Sept. 20, 2020 7:18p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,657.42
-244.56 -0.88%
Volume: 703.89M
Sept. 18, 2020 5:15p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,319.47
-37.54 -1.12%
Volume: 4.09B
Sept. 18, 2020 5:15p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,793.28
-116.99 -1.07%
Volume: 5.26M
Sept. 18, 2020 5:16p
loading...
/zigman2/quotes/203681809/delayed
ES : Spain: Madrid
24.85
-0.61 -2.40%
Volume: 9.99M
Sept. 18, 2020 5:38p
P/E Ratio
31.00
Dividend Yield
1.14%
Market Cap
€77.40 billion
Rev. per Employee
€149,497
loading...
/zigman2/quotes/208224336/delayed
FR : France: Euronext Paris
68.60
-2.52 -3.54%
Volume: 3.99M
Sept. 18, 2020 5:39p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
€53.76 billion
Rev. per Employee
€476,596
loading...
/zigman2/quotes/205396176/delayed
FR : France: Euronext Paris
3.66
-0.07 -1.93%
Volume: 5.41M
Sept. 18, 2020 5:35p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
€1.56 billion
Rev. per Employee
€328,953
loading...
/zigman2/quotes/205496028/delayed
DE : Germany: Frankfurt
8.68
-0.28 -3.13%
Volume: 13,718
Sept. 18, 2020 8:58p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€264,465
loading...

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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