By Steve Goldstein, MarketWatch
European banks dropped on Monday after the chief regulator for the region recommended no dividend payments be made until the autumn, though the broader market turned higher after a strong start on Wall Street.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.10% , which rose 6.1% last week, edged up 0.4%.
The gains came despite heavy losses for banks.
ING /zigman2/quotes/203351007/delayed NL:INGA +1.83% , KBC Group /zigman2/quotes/209494285/delayed BE:KBC -0.09% , UniCredit /zigman2/quotes/200769686/delayed IT:UCG +5.39% and ABN Amro /zigman2/quotes/209088556/delayed NL:ABN +2.05% each withdrew dividend-paying proposals after the European Central Bank called on banks not to pay them through October. ABN Amro also said it expects to report a loss in the first quarter, as it had announced last week a big loss from its clearing arm.
“Capital conserved by refraining from dividend distributions and share buybacks can also be used to support households, small businesses and corporate borrowers and/or to absorb losses on existing exposures to such borrowers,” the ECB said.
Other companies in Europe, including engineering group ABB /zigman2/quotes/201477239/delayed CH:ABBN -0.75% , chip-equipment maker ASML Holding /zigman2/quotes/206208657/delayed NL:ASML -3.35% and luxury goods giant LVMH Moët Hennessy /zigman2/quotes/201350549/delayed FR:MC -1.01% , reported the impact of coronavirus on their finances.
President Donald Trump said social distancing measures would continue through the end of April and set June as his target for returning to normal.
There were 723,700 confirmed cases globally, including 143,025 in the U.S., according to the Johns Hopkins tracker of COVID-19 cases. It has now been two weeks since New York City, the epicenter of the crisis in the U.S., started to implement shutdown measures.
“The coming weeks will be a blizzard of bad news—both on the economy and public health. We doubt that markets will be able to price out adverse tail risks against that backdrop, and new challenges might emerge, including sovereign downgrades, FX peg breaks, or a wave of business failures,” said analysts at Goldman Sachs.
HelloFresh /zigman2/quotes/203376622/delayed XE:HFG -2.02% , the prepared food-kit maker, extended its rally, surging 8% to take year-to-date gains to 46%.