Travel and auto stocks lead Europe lower amid virus fears - Metro US

Travel and auto stocks lead Europe lower amid virus fears

The German share price index DAX graph is pictured at the stock exchange in Frankfurt

(Reuters) – Travel stocks, automakers and banks led a slide in European shares on Wednesday as fears of a resurgence in coronavirus cases and a worrying outlook from the U.S. central bank chief dented hopes of a swift economic recovery.

The pan-European STOXX index fell 1.9% to hit a one-week low, with losses deepening after U.S. Federal Reserve Chair Jerome Powell warned of an “extended period” of weak growth and stagnant incomes due to the health crisis.

Europe’s hard-hit travel & leisure index and auto stocks fell 5% each, while banking shares slid 3.7%.

A batch of weak earnings reports added to the gloom.

Shares in Germany’s Commerzbank fell 7.1% and Dutch bank ABN Amro dropped 9.1% after swinging to a loss in the first quarter as the pandemic drove up loan loss provisions.

Deutsche Bank sank 6.4% on news that top managers will waive one month of fixed pay in an effort to cut costs.

UK-based luxury carmaker Aston Martin plummeted 16% as it posted a deep first-quarter loss after sales dropped by nearly a third due to the impact of the coronavirus crisis.

European shares have reversed some of the strong recovery gains made in April, as South Korea, Germany and China reported a rise in infections after easing their restrictions and a top U.S. health expert warned against easing lockdowns too soon.

“The correction could continue for a few weeks,” said Simona Gambarini, markets economist at Capital Economics. “There are worries about easing of lockdowns being premature in certain countries, a second wave of contagion, weak economic data and tensions between the U.S. and China.”

A leading U.S. Republican senator on Tuesday proposed legislation that would authorize President Donald Trump to impose sanctions on China if it fails to give a full account of events leading to the outbreak of the coronavirus.

Sensor producer AMS slumped 8.7% after saying that it planned another capital increase to finance the takeover of Osram.

Shares in Exor, the holding firm of Italy’s Agnelli family, fell 7.2% after French insurer Covea walked away from its planned $9 billion purchase of PartnerRe, the Bermuda-based reinsurer owned by Exor.

Earnings expectations are deteriorating sharply in Europe, with companies listed on the STOXX 600 now expected to report a collective drop of 46.7% in earnings in the second quarter, down from a fall of 44.9% forecast the week before.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Bernard Orr and Pravin Char)

More from our Sister Sites