European stocks drop and Dow futures slide 400 points as rising COVID-19 cases set to trigger more restrictions
People sit at a cafe terrace as the Eiffel Tower is seen in the background in Paris on October 26, 2020, before a nighttime curfew imposed as part of measures aimed at curbing the spread of the Covid-19 pandemic, caused by the novel coronavirus.
AFP via Getty Images
European stocks fell for a third-straight session on Wednesday, with U.S. equity futures also sliding as investors juggled another busy earnings day and braced for more restrictions to come from rising coronavirus cases on the continent.
The Stoxx Europe 600 index
SXXP,
fell 2.3%, after closing nearly 1% lower on Tuesday. The German DAX
DAX,
dropped 3%, the French CAC 40
PX1,
over 3% and the FTSE 100
UKX,
fell 2.1%.
Wall Street was also pointing to more losses, with Dow futures
YM00,
down by over 400 points. Stocks finished mostly lower on Tuesday, day after their worst decline in a month as rising COVID-19 cases and abandoned hopes for a pre-election stimulus plan hit investors. The U.S. presidential election is just a week away
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French President Emmanuel Macron may announce fresh restrictions in a televised address Wednesday, The Wall Street Journal reported. France has emerged as Europe’s worst-hit nation as a second wave of the virus sweeps across the continent.
German Chancellor Angela Merkel may also announce fresh restrictions on movement on Wednesday as cases climb in that country, tabloid newspaper BILD reported.
“While it’s unlikely the continent will lockdown, with economic juggernauts France and Germany struggling to contain the virus, it is hard to envision anything but both economies, and the eurozone in general struggling into 2021 or until a vaccine comes available,” said Stephen Innes, chief global markets strategist at AXI, in a note to clients.
Governments have been scrambling with fresh measures to contain the pandemic that has sparked protests in places such as Italy, where the government is reportedly preparing a relief package for businesses affected by new containment moves.
The European Central Bank meets on Thursday, but economists do not expect any stimulus moves until the December meeting.
A big week for earnings was continuing on both sides of the Atlantic. Tech giant Microsoft
MSFT,
topped earnings and sales forecasts late Tuesday, but its outlook disappointed. Multinational conglomerates GE
GE,
and Boeing
BA,
are among the big names reporting Wednesday.
Banks led the way south in Europe, with shares of Deutsche Bank
DB,
dropping 2.5% after the German lender posted forecast-beating results that were lifted by a strong performance for its investment bank.
“A good set of results but an accompanying outlook statement that suggests little change to consensus EPS (earnings per share),” said a team of Citi analysts led by Andrew Coombs. “We remain Sellers as we believe the IB (investment bank) industry backdrop is unlikely to be as supportive for Deutsche Bank in 2021.”
Shares of Puma
PUM,
fell 2.4% after the German sports retailing company reported higher third-quarter profits and sales, but said it can’t give guidance for the year due to too much uncertainty still over the virus fallout.
French auto maker Peugeot
UG,
posted a third-quarter revenue fall and said it expects the European car market to drop 25% in 2020. Shares dropped 3.7%.
Also in France, Carrefour
CA,
said like-for-like sales grew in the third quarter and it backed the targets set as part of its Carrefour 2022 plan. But shares dropped 2.7% .
Shares of Sopra Steria
SOP,
slid 13%, making the French consulting and software development company the worst-performer on the Stoxx Europe 600 after it reported a third-quarter revenue drop, mostly due to weak business activity in the aeronautics sector.
Weak oil prices weighed on major energy companies, with shares of BP
BP,
off 2.% and Total
TOT,
down 4%. U.S. crude
CL.1,
and Brent prices
BRN00,
fell 3.5% and 2.5% respectively after the American Petroleum Institute reported late Tuesday that U.S. crude supplies climbed by nearly 4.6 million barrels for the week ended Oct. 23, according to sources.
