European stocks hit late-May lows as lockdown fears rattle investors

October 28, 2020

Frankfurt (Oct 28)  Losses accelerated across European stock markets on Wednesday, with the benchmark STOXX 600 tumbling to its lowest level since late-May on fears of a new national lockdown in France and tighter curbs elsewhere to combat a surge in coronavirus cases.

The pan-European STOXX 600 index .STOXX fell 2.4%, while Germany's DAX .GDAXI and France's CAC 40 .FCHI both plunged 3.3% and UK's FTSE 100 .FTSE dropped 2.2%.

The French government has been exploring a new, national lockdown from midnight on Thursday, BFM TV reported, albeit a slightly more flexible one than the two-month shutdown that began in mid-March.

President Emmanuel Macron will give a televised address later in the evening, his office said.

Meanwhile, German Chancellor Angela Merkel wants to close all restaurants and bars from Nov. 4 according to a draft resolution seen by Reuters, while the Telegraph newspaper reported British Prime Minister Boris Johnson is under pressure for a new lockdown.

“Global markets look incredibly nervous, the mix of rising COVID-19 cases and deaths and the potential full lockdown in France, add this to the uncertainty ahead of the U.S. elections and you have a very poor backdrop,” said John Woolfitt, director of trading at Atlantic Capital Markets.

“I don’t expect this to be long-term, but nervousness will continue until elections are done and some form of steadying in the COVID-19 numbers.”

Economically sensitive sectors such as automakers .SXAP, banks .SX7P and insurers .SXIP led declines, falling between 3.9% and 4.4%.

U.S. futures EScv1 also slid over 1% as investors stayed on the sidelines with no stimulus package in sight and just a week to go before the U.S. presidential election.

The downbeat mood overshadowed a batch of upbeat quarterly results from European companies.

Deutsche Bank AG DBKGn.DE reported a surprise swing into quarterly net profit and upgraded the revenue outlook for its investment bank, but its shares fell 4.2%.

Carrefour CARR.PA delivered its strongest quarterly underlying sales growth for at least two decades. Shares of Europe's largest retailer, however, dropped 2.5%.

German online takeaway food company Delivery Hero DHER.DE was among the few gainers, up 4.1%, after it raised its guidance for 2020 sales for the second time this year.

Reuters

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