Stocks – Europe Lower; Shutdowns Weigh on Asian Economies

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Investing.com – European stock markets traded sharply lower Wednesday, as the latest round of purchasing manager surveys across Asia and Europe kept investors focused on the scale of the economic crisis caused by the coronavirus pandemic.

At 4:30 AM ET (0830 GMT), the U.K.’s FTSE index traded 3.8% lower, France’s CAC 40 was down 3.6%, while the DAX fell 3.1%. The broader based Stoxx 600 Europe index dropped 2.8%.  

IHS Markit’s manufacturing purchasing managers’ index for the euro zone fell to its lowest since 2012 in March, while the manufacturing PMI in Italy, which has been hit hardest by the Covid-19 epidemic, hit an 11-year low. 

Factory activity also dropped sharply across most of Asia in March, according to Markit’s PMIs, with regional economic powerhouses Japan and South Korea, major exporters to Europe, posting their biggest contractions in about a decade.

The Bank of Japan’s “tankan” corporate survey showed Japanese manufacturers turned pessimistic for the first time in seven years.

The surveys illustrate the economic damage caused by the pandemic that has infected more than 850,000 people, killed over 42,000, upended supply chains and led to city lockdowns worldwide.

President Donald Trump warned Americans late Tuesday to brace for a “rough two-week period” ahead as the White House released new projections that there could be 100,000 to 240,000 deaths in the U.S. from the coronavirus pandemic.

In corporate news, the European banking sector was sharply lower, with U.K. banks leading the way after a number of them said they would cancel their dividend payments at the U.K. financial regulators request. HSBC (LON:HSBA) shares slumped over 9%, Barclays (LON:BARC) shares fell 5.5%. The banks account for some 12% of all U.K. dividends. 

Dividend paid by companies listed on the pan-European STOXX 600 index for this year are expected to fall by about 40%, Emmanuel Cau, head of European equity strategy at Barclays said Wednesday.

Auto Trader shares (LON:AUTOA) fell over 5% after the U.K.-based online car marketplace said Wednesday it would sell up to 46.5 million new shares, worth 5% of its share capital, to institutional investors in a bid to shore up cash during the coronavirus crisis. London-listed cruise line operator Carnival (LON:CCL) is later expected to price a multi-tranche $6 billion capital raising in what will be a closely-watched effort by a major leisure company to stay afloat without government support.

The data barrage continues later in the U.S.  Eyes are likely to be on the ADP payrolls report data, at 8:15 AM ET (1215 GMT), ahead of Friday’s official payrolls release.

Oil markets declined again after a call between Presidents Donald Trump and Vladimir Putin failed to produce any concrete support for the market. .

At 4:30 AM ET, U.S. crude futures traded 1.5% lower at $20.18 a barrel. The international benchmark Brent contract fell 5.7% to $24.86.

Elsewhere, gold futures rose 0.7% to $1,608.05/oz after ending the first quarter with a sharp sell-off, while EUR/USD traded at 1.0970, down 0.5% on the day.

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