European shares sank on Thursday as a resurgence in Covid-19 cases across the continent and fading hopes for more US fiscal stimulus before the presidential election dented demand for equities globally.
The pan-European Stoxx 600 index fell 2.1 per cent in its worst day in more than three weeks, with autos, insurance and energy stocks tumbling more than 2 per cent.
Bank shares tracked a decline in bond yields, shrugging off signs of a pickup in M&A activity after a report said Italy’s Banco BPM and France’s Credit Agricole had signed a confidentiality agreement in a first step towards formal talks over a possible merger.
"Investors are unnerved by what's going on with Covid-19 and how that is negatively impacting jobs and the ability for many businesses to succeed," said Russ Mould, investment director at AJ Bell. "It's becoming more apparent that the pandemic could still be raging well into 2021, and so economic prospects have become even more clouded."
The Iseq was down 1.7 per cent at 6,587 with Covid worries dampening investor appetite. Ryanair fell 4.3 per cent as it said it would cut its planned winter capacity by a third due to the wave of travel restrictions imposed by European governments. This came with the news that it plans to close its Cork and Shannon airport bases and slash Knock services for the winter to cope with the fall-off in demand.
Swiss-Irish food company Aryzta was down 4.6 per cent at 56 cent, as investors awaited of a possible takeover bid for the beleaguered group by US hedge fund Elliott Management. So far the company's revamped board has said it is its duty to consider all approaches.
Building materials giant CRH was down 2 per cent at €32.04 on the back of a negative global outlook generally and stalling recovery in the US economy, where it has significant operations.
The pick-up in cases of Covid-19 across Europe pushed shares in packaging group Smurfit Kappa down by 3 per cent to €34.
London’s FTSE 100 fell to a near-two week low on Thursday as concerns over new coronavirus restrictions and Brexit-related uncertainty prompted investors to book profits after a rally earlier in the month. After slumping as much as 2.5 per cent during the session, the blue-chip index closed down 1.7 per cent to mark its biggest daily decline since late September, with energy, insurance and mining stocks leading declines.
In company specific news, recruitment agency Hays fell 1.3 per cent after posting a 29 per ent drop in its first-quarter net fees due to the coronavirus crisis. Business supplies distributor Bunzl and Britain's biggest retailer Tesco lost 2.4 per cent and 3 per cent in ex-dividend trading. However, AO World surged 30.7 per cent after the online electrical retailer said it expects a 57 per cent increase in first-half revenue on strong consumer demand during the Covid-19 pandemic.
European stock markets bounced from the coronavirus lows in March on a raft of global stimulus, but sentiment has recently taken a hit from the surge in infections as well as signs of a slowing economic rebound. France has imposed curfews and other European nations are closing schools and cancelling surgeries in an attempt to contain the resurgence ahead of the winter season. Bourses in France, Italy, Spain and Germany fell between 1.4 per cent and 2.8 per cent.
In company news, Swiss drugmaker Roche shed 3.5 per cent even as it posted record revenue in its diagnostics division that offset declining drug sales and kept it on track to meet its full-year 2020 targets.
US stocks dropped on Thursday as an unexpected rise in weekly jobless claims compounded fears of a stalling economic recovery, against the backdrop of dimming hopes for more fiscal aid before the election. Initial claims for state unemployment benefits totalled a seasonally adjusted 898,000 for the week ended October 10th, compared to 845,000 in the prior week, the Labor Department said on Thursday.
Beside the forthcoming election, focus is on the quarterly earnings scorecard for corporate America, with expectations for third-quarter earnings improving to an 18.8 per cent drop from a 25 per cent tumble forecast on July 1st, according to Refinitiv IBES data.
Morgan Stanley edged 0.6 per cent higher after it beat third-quarter profit estimates, winding up mixed results from major US lenders.
Walgreens Boots Alliance gained 3 per cent as the drugstore chain forecast profit to grow in single digits in 2021 after posting a better-than-expected fourth-quarter profit.
The S&P 1500 airlines index shed 2.3 per cent as United Airlines reported a 78 per cent drop in quarterly revenue.
Shares of drug developer Vertex Pharmaceuticals sank 19.2 per cent after it discontinued its trial of a protein deficiency disorder treatment. - Additional reporting: Reuters