Shares slide on escalating US-China tensions and Covid-19 fears

European shares slid on Wednesday as escalating US-China tensions and a surge in coronavirus cases dented sentiment after an EU-wide debt deal sent the region's markets to four-month highs in the previous session.

DUBLIN

Irish shares reversed their gains on Wednesday with the Iseq All-Share index ending the day down 0.6 per cent.

Leading the losers was Dalata Hotel Group, which fell 6.27 per cent to €2.69, albeit on relatively light volume.

The State's largest hotel group was something of an outlier on the Irish market with such a significant fall, although consumer facing stocks did drop. Forecourt retailer Applegreen slipped 3.24 per cent to €3.58, while Ryanair closed 1.12 per cent lower at €11.02.

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Banks, while also reversing gains, underperformed the wider market on the day. AIB held on to most of its gains, dipping by just 1.19 per cent to €1.25, while Bank of Ireland declined by 4.94 per cent to €1.83.

House builders, too, were weaker on Tuesday, although most gained. Cairn Homes rallied before the close to end the day 1.16 per cent higher at €0.87.

LONDON

The Ftse 100 was down 1 per cent on the day, with oil heavyweights BP and Royal Dutch Shell among the top drags as oil prices plummeted on a surprise rise in inventories.

Losses on the export-heavy Ftse 100 were more pronounced than those on the domestically inclined midcap index, owing to recent strength in the pound.

Drugmaker AstraZeneca also weighed, retreating further from record-high levels after the lead developer of its vaccine expressed caution on Tuesday about when it could be rolled out.

Turnaround specialist Melrose tumbled 14 per cent to the bottom of the Ftse 100 as it signalled it could cut jobs to combat the coronavirus-led downturn.

Sentiment was also dampened by a surge in global coronavirus cases past 15 million. Local stocks extended losses toward the end of the session, tracking a mixed open on Wall Street.

In domestic earnings-driven news, home improvement retailer Kingfisher marked its best day since 1986, topping the Ftse 100 after it forecast a rise in underlying first-half profit.

EUROPE

Breaking a three-day winning streak, the pan-European Stoxx 600 closed down 0.9 per cent to post its sharpest one-day drop in a month.

Energy stocks took the biggest hit, down 2.8 per cent after data showed a bigger-than-expected inventory build-up in the United States. Total dropped more than 3 per cent.

Healthcare stocks marked their worst session in a month, while China-sensitive basic material stocks lost 1.4 per cent.

Swiss engineering company ABB rose 2.8 per cent after saying its order situation could improve in the coming months.

Car makers were hit by a 1.3 per cent slide in French car parts maker Valeo after it swung to a €1.2 billion first-half loss.

Expectations for second-quarter corporate profits in Europe have further deteriorated, Refinitiv data shows, as fears grow over the extent of the recession triggered by the pandemic. Companies listed on the Stoxx 600 are expected to report a decline of 58.6 per cent in quarterly earnings, versus 56.2 per cent forecast the week before.

NEW YORK

The S&P 500 ticked higher in a choppy session on Wednesday as a boost from Microsoft and optimism about another round of stimulus for the virus-stricken economy countered worries over worsening ties between the United States and China.

Tesla and Microsoft rose 1.2 per cent and 0.8 per cent in the run up to their quarterly reports due after markets close.

Pfizer advanced 3.3 per cent as the drug maker and German biotech firm BioNTech said it would get $1.95 billion from the US government to produce and deliver its Covid-19 vaccine candidate.

Snap declined 7.9 per cent as it forecast fewer current-quarter users than estimates and said the initial lift in user growth at the start of coronavirus-led lockdowns dissipated faster than it expected. – Additional reporting: Reuters