European stocks slid into the red on Tuesday as COVID-19 cases continue to weigh on markets, with Germany the latest country to take new lockdown measures to contain the spread of coronavirus.
The pan-European Stoxx 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.84% was 0.1% lower while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.20% fell 0.4%. The CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -1.75% in Paris dipped 0.2% and Frankfurt’s DAX /zigman2/quotes/210597999/delayed DX:DAX -1.94% was slightly above flat.
U.S. stocks were mixed, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.30% down more than 30 points by midday after climbing more than 100 points on Monday to close at 32,731.
German Chancellor Angela Merkel announced on Tuesday that the country would extend its national lockdown until April 18, with an even stricter shutdown in place from April 1 to April 5 over the Easter period. The Chancellor said that Germany needed to “break the exponential growth of the third wave,” as quoted in public broadcaster DW .
Coronavirus infections have been rising across Europe, and the move in Germany came as Austria cancelled its plans to reopen following Easter and Paris entered a month-long lockdown late last week.
CMC Markets analyst Michael Hewson said that the start of the week in European markets has been marked by concerns that “a third wave in Europe will delay an economic reopening, and push it into the middle of the summer.”
“This presents a problem for the travel sector and the potential for a speedy recovery, given the slow nature of the rollout due to supply, as well as hesitancy concerns,” Hewson added.
“When set against rising infection rates across Europe, it is likely to mean that even in the event of a successful rollout in the U.K., it’s highly unlikely that international travel will be able to return in any meaningful way while a large part of Europe remains behind the curve in inoculating its populations,” Hewson said.
Travel stocks led the charge into the red in Europe, with shares in airlines Air France-KLM /zigman2/quotes/205396176/delayed FR:AF -1.38% , Lufthansa /zigman2/quotes/201210530/delayed XE:LHA -2.59% , EasyJet /zigman2/quotes/202825892/delayed UK:EZJ -2.73% , Ryanair , and IAG /zigman2/quotes/208070069/delayed UK:IAG -2.93% —which owns British Airways—falling. InterContinental Hotels Group /zigman2/quotes/202865596/delayed UK:IHG -1.01% stock also declined.
The price of oil is also down, with benchmark Brent crude trading 4% lower, below $62.10 a barrel. Shares in European-listed oil groups BP /zigman2/quotes/202286639/delayed UK:BP -1.77% , Royal Dutch Shell /zigman2/quotes/206428183/delayed UK:RDSA -1.69% , Total , and Eni /zigman2/quotes/209584888/delayed IT:ENI -1.38% all fell.
Cineworld /zigman2/quotes/206525056/delayed UK:CINE -5.62% stock slid as the world’s second-largest movie theatre chain said it planned to reopen its U.S. cinemas in April in time for “Godzilla vs. Kong,” with British theatres to open a month later. The group also said that it had reached a multi-year agreement with Warner Bros. to shorten the exclusive theatrical window for the production company’s films to just 45 days. The typical theatrical window is 90 days.
Volvo /zigman2/quotes/208939564/delayed SE:VOLV.B -0.67% stock tumbled 6% after the truck maker warned Monday night that production in the second quarter of 2021 would feel a “substantial” impact from the global semiconductor shortage.