European stocks edge lower after Monday’s pounding over coronavirus spread

European stocks drifted lower in volatile trading on Tuesday as markets failed to set a floor after the pounding they took over the spread of the coronavirus in Italy and South Korea.

A day after a 5.4% drop that was the worst single-day percentage fall in more than three years, Italy’s FTSE MIB

I945, -1.19%

 fell 0.7% to 23259.18. Banco BPM

BAMI, -3.38%

 and Juventus Football Club

JUVE, -1.61%

each lost over 3%.

The Stoxx Europe 600

SXXP, -0.75%,

which ended Monday at its third-lowest level of the year, slipped 0.5% to 410.01.

The spread of the coronavirus in Italy is particularly worrying since the country has not identified the so-called patient zero who spread it.

South Korea now has 977 confirmed cases to Italy’s 232, according to the Covid-19 tracker from Johns Hopkins. Mainland China has 80,242 confirmed cases.

“Given the incubation period of the virus, the next two weeks will be critical in determining the extent of the outbreak, the steps authorities are willing and able to take to contain it, and the economic effect of those measures,” said Mark Haefele, global chief investment officer of wealth management at UBS, which prefers emerging market equities over eurozone stocks.

U.S. stock futures

ES00, +0.13%

 nudged higher on Tuesday following the 1,031-point annihilation in the Dow Jones Industrial Average

DJIA, -3.56%

on Monday.

The yield on the German 10-year bund

TMBMKDE-10Y, -6.94%

fell three basis points to -0.51%. Yields move in the opposite direction to prices.

Of stocks on the move, U.K. insurer Prudential

PRU, +1.48%

 rose 1.9% after the activist investor Third Point disclosed it was the company’s second-largest shareholder and called on it to separate its U.S. business, Jackson National Life Insurance, and Asian arm, Prudential Corp. Asia.

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Italian stocks set to lead sharp decline for European equities as coronavirus spreads

European stock markets were poised for a sharply lower open on Monday, with investors gripped by worry as coronavirus cases surged outside of China — in South Korea, Iran and Italy — over the weekend.

Futures for the FTSEMIB Italy index

I945, -1.22%

 indicated a 3.7% drop at the start of trading for the index as coronavirus cases swept through the northern Lombardy region over the weekend, which includes the financial capital, Milan. Officials put nearly a dozen towns on lockdown as the number of confirmed cases went from three on Friday to more than 150 by Monday, with three deaths.

Intesa Sanpaolo SpA

ISP, +0.00%

 said it would close branches across northern Italy, due to the quarantine that is affecting 50,000 people.

German DAX 30 index futures

DAX, -0.62%

 pointed to a 2% drop and those for the FTSE 100 index

UKX, -0.44%

 were down about 1.7%. Spain’s IBEX 35 index

IBEX, -0.45%

 was set to lose 2.4% at the start, according to futures prices. European stocks finished lower last week amid concerns about the virus’s spread beyond China’s borders, with the Stoxx Europe 600 index

SXXP, -0.49%

  dropping 0.5% on Friday to 428.07, and down 0.6% for the week.

South Korea reported 161 new cases on Monday, bringing the country’s total to 763 cases, and two more deaths raising that toll to seven. Iran reported 43 cases and eight deaths. China reported 409 new cases, raising the country’s total to 77,150, along with 150 deaths.

“With further outbreaks likely to continue across the world, and Iraq and Turkey closing their borders to Iran after cases being reported there, financial markets could well have to get used to an extended period of uncertainty, as consumer behavior globally starts to change,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note to clients.

“There is already evidence that this is happening, with Chinese tourist numbers down across the world, while the French finance minister said that tourist numbers in France were already down over 30% at this weekend’s G20 finance ministers meeting,” he said.

On Saturday, the International Monetary Fund warned the virus outbreak could reduce global economic growth by 0.1% this year, and drag China’s annual growth 0.4 percentage points lower than January estimates.

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European shares fall as investors eye data showing virus impact By Reuters

(Reuters) – European shares dropped on Friday as markets awaited a local reading on economic health to gauge the extent of the impact of the coronavirus on business activity in the bloc.

The outbreak has killed more than 2,000 people so far and upended industrial activity in China, causing disruptions for several European manufacturers that supply and source products from one of the EU’s largest trading partners.

The pan-European STOXX 600 index () fell 0.5% by 0803 GMT and was set to lose slightly for the week. A raft of weak earnings, particularly in the insurance () and bank () sectors, have weighed on the index over the past week.

Commodity-linked subindexes such as basic resources () and oil and gas () stocks were among the worst performers in early trade.

The IHS Markit’s euro zone flash composite purchasing manufacturer’s index (PMI), due at 0900 GMT, is expected to provide a preliminary reading on business activity in February.

The figure is expected to weaken from the prior month, according to a Reuters poll.

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European chip stocks tumble on Apple warning, while HSBC slumps on profit slide

European stocks came under pressure on Tuesday, with chip makers heading south after Apple warned it will miss its quarterly revenue target due to coronavirus fallout, while shares of HSBC slid as it announced a profit slump and suspension of buybacks.

The Stoxx Europe 600 index

SXXP, -0.43%

 fell 0.5% to 429.64, a day after marking a fresh record close of 431.98, a gain of 0.3%. The German DAX 30 index

DAX, -0.64%

 dropped 0.7%, while the French CAC 40 index

PX1, -0.41%

 fell 0.5% and the FTSE 100 index

UKX, -0.71%

 slipped 0.5%.

U.S. stock futures were under pressure, with S&P 500 futures

ES00, -0.39%

 down 0.5%, while tech-heavy Nasdaq-100 futures

NQ00, -0.77%

 sliding around 0.9%. The Nikkei 225

NIK, -1.40%

 dropped over 1%, while Korea’s KOSPI

180721, -1.48%

 tumbled 1.4%.

In a warning that came while Wall Street was closed for the Presidents Day holiday, Apple

AAPL, +0.02%

 said it was unlikely to meet its revenue target for the quarter ending in March, triggering a more than 3% drop in premarket trading of shares, and losses across global equities. Apple said production among its suppliers in China is ramping up slowly after an extended Lunar New Year break to stem the spread of the virus.

In the chipmaking space, shares of Dialog Semiconductor

DLG, -5.05%

and ASM International NV

ASM, -4.49%

 slid around 5% each, while AMS

AMS, -2.42%

 fell around 4%.

Investors are also waiting for the ZEW economic sentiment index out of Germany for February for economic sentiment in Germany and the eurozone due to the coronavirus outbreak. China reported 1,886 new coronavirus infections and 98 deaths as of Tuesday. However, the Chinese Centers for Disease Control and Prevention published a study Monday showing that 80% of those infected suffered only mild illnesses.

Banks were the biggest losing sector in Europe, led by shares of HSBC

HSBC, -0.71%

HSBA, -6.40%

 dropped over 5% after Europe’s biggest lender said it would cut 35,000 jobs and strip out $100 billion in assets in a move to scale back Europe and U.S. operations as 2019 profit slumped 53%. HSBC also said its dividend would be suspended for this year and 2021 due to the costs of its restructuring.

Italian stocks were bucking a weaker trend, with the FTSEMIB Italy index

I945, +0.44%

 rising 0.1% thanks to a 26% rise in shares of Unione di Banche Italiane SpA. UBI Banca

UBI, +21.77%

 received a surprise offer from larger peer Intesa Sanpaolo SpA on Monday night to buy the Italian lender. Intesa Sanpaolo

ISP, +1.71%

 shares rose 1.4%.

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European stocks close higher as China cuts lending rate

European stocks advanced on Monday, edging higher as China moved to limit the fallout from the coronavirus halting activity in the world’s second-biggest economy.

The Stoxx Europe 600

SXXP, +0.34%

 increased 0.33% to 431.96. U.S. markets are closed in observance of Presidents Day, though U.S. stock futures

ES00, -0.17%

 traded higher in electronic trade.

China took another step to boost its economy, with the People’s Bank of China cutting its one-year lending rate, as the country announced it may postpone its annual congress in March. China’s finance minister also said the country is planning targeted tax cuts. The Shanghai Composite

SHCOMP, +2.28%

surged over 2%.

Analysts at Morgan Stanley say European companies are on track to deliver positive earnings per share growth in the fourth quarter for the first time in a year. “This is an impressive result in our opinion given soft comparisons don’t really come into play for the aggregate index until the first-quarter 2020 earnings season,” the bank’s analysts said, adding that earnings momentum may be dependent on the coronavirus.


EO, +6.53%

 shares rose 6.8% as the French auto parts company said it would outperform global automotive production by 1 to 2 percentage points this year, which is stronger than its previous forecast of 1 to 1.5 percentage point outperformance. Its net profit in 2019 slumped to €590 million from €701 million the previous year, while sales inched up 1.4% to €17.77 billion.

Shares in Bayer

BAYN, -1.01%

 slipped 1.9% and BASF

BAS, -0.93%

fell 1% as the companies were ordered to pay $265 million to a Missouri peach farmer who said the companies’ herbicide drifted from nearby farms onto his property and hurt his orchard. Both companies are appealing.

“We don’t expect this new scandal to cost as much as the glyphosate scandal may, but the timing for Bayer is not the best,” said Jean-Jacques Le Fur, an analyst at brokerage Bryan, Garnier & Co.


ALO, +3.50%

  rose 3.8% as the company reached a tentative pact to buy Bombardier’s train business for more than $7 billion.

Jupiter Fund Management

JUP, +3.66%

jumped 3.7% as the company said it was proposing to buy Merian Global Investors, which manages £22 billion in assets, for £370 million of stock as well as up to £20 million more in deferred payments. Jupiter said the cost synergies from the deal for Merian will lead to low to mid-teen accretion to underlying earnings per share in 2021, as its total assets under management will grow to £65 billion. Analysts at Berenberg estimate Jupiter is paying 11 times earnings for Merian, which is a 23% discount to listed European asset managers.

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