European shares lower on profit warnings
European shares headed lower on Thursday, as a slump in British stocks and profit warnings from several companies soured market sentiment even after central banks this week tried to ease the blow of the coronavirus outbreak on global growth.
The main European equity benchmark reversed early gains to trade down 0.8%. London’s FTSE 100 fell 1.3%, with several companies including Evraz Plc, Rio Tinto, Persimmon and BHP sliding as they traded ex-dividend. Among euro zone stocks, German auto supplier Continental slumped 10.5% after it posted a net loss of 1.2 billion euros in 2019, as it suffered from a global downturn in demand for passenger cars.
The broader automakers index dropped 2.2%, while miners fell 2.8%, leading declines among the STOXX 600 subsectors. Airbus shares fell 2.8% after Bloomberg reported the company was considering a cut in production of the A330neo jet after its biggest customer deferred deliveries due to a slump in travel demand. In a sign of deep damage to the travel industry, British regional airline Flybe collapsed, making the struggling carrier the industry’s first big casualty of the outbreak.
Following late February’s rout that pushed European markets into correction territory, markets stabilised somewhat this week as investors were hopeful stimulus measures from governments and central banks would protect the global economy.
Analysts firmly expect the European Central Bank to cut interest rates by 10 basis points next week, joining the U.S. Federal Reserve and its peers in Canada and Australia in reducing borrowing costs.
The outbreak shows little signs of peaking globally, with Italy closing all schools and California declaring a state of emergency.
Ratings agency S&P Global halved its eurozone growth forecast for the year to 0.5% from 1% on Wednesday and predicted a 0.3% contraction for hard hit Italy.
This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.