TheJakartaPost

Please Update your browser

Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.

Jakarta Post

European shares tumble to four-month low as virus risks grow

  • Sruthi Shankar

    Reuters

London, United Kingdom   /   Wed, February 26, 2020   /   05:10 pm
European shares tumble to four-month low as virus risks grow Tourists wearing protective masks visit Venice on February 25, 2020, during the usual period of the Carnival festivities which have been cancelled following an outbreak of the COVID-19 novel coronavirus in northern Italy. - Italy's new coronavirus spread south on February 25 to Tuscany and Sicily, as the civil protection agency reported a surge in the number of infected people and Rome convened emergency talks. (AFP/ ANDREA PATTARO)

European shares fell to a near four-month low on Wednesday, as the fast-spreading coronavirus deepened fears about its impact on global growth with marquee companies sounding the alarm on earnings.

The main European equity benchmark STOXX 600 tumbled 2.6 percent, marking its first five-day losing streak since July.

Travel stocks, financial services, chemical and technology stocks were among the worst hit, falling between 3 percent and 4 percent.

The losses followed a grim session for Asia and Wall Street overnight after US health officials warned Americans should prepare for possible community spread of the virus that has now hit Spain and dozens of countries from South Korea to Italy.

The STOXX 600 is trading 9.4 percent below the record highs hit just last week, while the past four trading sessions has wiped out about $3 trillion in value of world stocks.

British spirits maker Diageo fell 3 percent after estimating an up to 200 million pounds ($260 million) hit to fiscal 2020 profit from the outbreak.

Rivals Remy Cointreau SA and Pernod Ricard dropped 4.2 percent and 2.2 percent, respectively.

"This is part of the ongoing reassessment of how bad the economic impact could get if the virus were to spread to more countries," said Simona Gambarini, markets economist at Capital Economics in London.

"Longer the shutdown lasts, then more likely that some of that production might never come back because companies might go bankrupt and people are also starting to take unpaid leaves."

Food group Danone cut its 2020 forecast for sales and profit margin, citing an uncertain economic climate and the coronavirus outbreak. However, its shares rose 1.4 percent.

Global miner Rio Tinto fell 1.8 percent after signalling that the outbreak may create challenging conditions in the next six months.

Latest data from Refinitiv shows European companies are expected to report a 1.2 percent fall in profits in the fourth quarter, a bigger drop than previously expected, which would keep them stuck in a year-long earnings recession.

The biggest decliner on the STOXX 600 was Danish services company ISS, slumping 14 percent after results.

Pressuring Norwegian shares was a 4 percent fall in fish farmer Salmar after warning of weak salmon output volumes for the current quarter.