Panicky mood reigns in financial markets as European, Asian stocks slump
A sweeping sell-off across European stock markets dragged several equity benchmarks toward a bear market after an all-out price war in oil dealt a new blow to investors already grappling with jitters about the coronavirus.
The main Stoxx Europe 600 Index slumped as much as 6.9%, the most since the aftermath of the 2016 Brexit vote, taking its decline since last month’s record high to more than 20%. The Euro Stoxx 50 Index and benchmarks of Italy, Spain, France and the U.K. were also poised to enter bear territory, as were several sector indexes in the Stoxx 600.
Energy shares hit their lowest since 1997 after the collapse of talks between OPEC and Russia prompted Saudi Arabia to launch a price war. More than half of the 19 industry gauges in the Stoxx 600 are down 20% or more since the benchmark’s Feb. 19 peak. After oil shares, banks, travel-and-leisure and mining shares have tumbled the most in that period, down more than 28%.
“I think what we’ll see is a correction over the next few days,” Ana Harris, global head of equity portfolio strategists at State Street Global Advisors, said in an interview on Bloomberg TV. “It’s important to keep a cool mind in such dramatic markets.”
An escalating virus outbreak beyond China has spurred a sharp sell-off in risk assets worldwide in recent weeks, with optimism over policy measures last week proving all too brief as profit and sales warnings and a rising number of cases spooked investors. The Stoxx 600 is headed for its steepest three-day drop since August 2015.
“So far, the market has largely ignored any positive news, which fits the panicky mood,” said David Kunz, managing director at BX Swiss in Zurich. “The market is clearly fearing a possible recession now.”
In Italy, a sweeping lockdown in the country’s industrial and financial heart added to pessimism about stocks and bonds in the country most affected by the coronavirus outside China. The FTSE MIB Index slid as much as 11%, with most stocks failing to trade at the open as their pre-market moves triggered a trading halt aimed at avoiding drastic price swings.
All 19 industry groups in the Stoxx 600 fell more than 3% on Monday. Energy shares tumbled 13%, dragged down by heavyweights BP Plc, Royal Dutch Shell Plc and Total SA following a slump in crude prices. The Stoxx 600 Oil & Gas Index is now down 41% since a late-2018 high.