By Steve Goldstein
European stocks traded lower on Monday on a combination of worries, including a profit warning from business software giant SAP, new restrictions on activity in response to COVID-19, and difficulties in U.S. stimulus talks.
Down 1.4% last week, the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.19% fell 0.7%.
After the SAP warning, the German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.19% skidded 2.2%. The French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.29% fell 0.6%, while the U.K. FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.38% lost 0.2%.
Further restrictions on activity were introduced in Europe to fight a second wave of the coronavirus pandemic . Italy from Monday will close bars and restaurants by 6 p.m., and shut cinemas and gyms altogether, while Spain is introducing an 11 p.m. curfew. World Health Organization Director-General Tedros Adhanom Ghebreyesus said Northern Hemisphere countries are facing a “dangerous moment.”
House Speaker Nancy Pelosi and White House chief of staff Mark Meadows on Sunday accused each other of moving the goal posts in stimulus talks, in separate interviews they gave to CNN.
Investors in Europe also are positioning ahead of talks between the European Union and the U.K. on a post-Brexit trade deal, this week’s European Central Bank meeting, and next week’s U.S. elections.
“Most investors want to remain optimistic about the upside potential of stock markets but they are becoming increasingly skeptical about the next U.S. stimulus package. In addition, recent record-breaking infection levels in many hot spots has led the EU to implement tougher restrictions (nationwide curfew in Spain, toughest Italian measures since May) which are widely expected to hurt businesses,” said Pierre Veyret, technical analyst at ActivTrades.
The closely followed Ifo business climate index for Germany fell in October for the first time in five months.
Also of note, the dollar /zigman2/quotes/210561895/realtime/sampled USDTRY -0.2747% broke through 8 Turkish lira, another indicator of the economic struggles Turkey is facing.
SAP /zigman2/quotes/202053813/delayed XE:SAP +0.14% /zigman2/quotes/207905606/composite SAP +0.74% dropped 18% — its worst single-day performance since losing 23% on Oct. 23, 1996 — as the German business software giant revised down its 2020 outlook, saying the impact of COVID-19 has been to push back customer investments between one and two years. SAP said its 2023 operating margin would be up to 5 percentage points lower than it previously targeted.
IT consultant Capgemini /zigman2/quotes/206891951/delayed FR:CAP +0.48% also dropped after the SAP warning.
Beverage company Coca-Cola European Partners /zigman2/quotes/201134901/delayed NL:CCEP 0.00% /zigman2/quotes/202925021/composite CCEP -0.17% rose 1% after offering A$10.8 billion, or €5.2 billion, for Coca-Cola Amatil /zigman2/quotes/206709542/delayed AU:CCL +0.07% , one of the largest bottlers and distributors of ready-to-drink nonalcoholic and alcoholic beverages and coffee in the Asia Pacific region. The Coca-Cola Co. /zigman2/quotes/209159848/composite KO +0.40% tentatively agreed to sell its 31% stake. Coca-Cola European Bottlers separately said third-quarter adjusted revenue fell 3%.
Bayer /zigman2/quotes/206842998/delayed XE:BAYN -0.53% rose 2% after the German pharmaceutical and chemicals company said it would pay up to $4 billion for Asklepios BioPharmaceutical, a U.S.-based biopharmaceutical company specializing in gene therapies.