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[BENGALURU] European stocks fell on Wednesday as the coronavirus lockdown prompted the federal government to lower its growth forecast for 2021 while talk of further rate cuts by the European Central Bank hit bank stocks. </ After the Europe-wide Stoxx 600 had remained largely unchanged in morning trading, it fell into the red and closed 1.2 percent – the largest percentage decline in one day for over five weeks.
The global mood also deteriorated, as investors became more cautious about the surge in coronavirus cases around the world and stretched stock valuations after retail investors accumulated in some niche US stocks, resulting in a staggering surge in their market value within days.
After the growth forecast for Europe, the German DAX lagged behind the most important regional indices with a minus of 1.8 percent largest economy for that year had been cut to 3 percent. This is a significant revision from last fall’s estimate of 4.4 percent.
Economic stocks took the brunt of Wednesday’s sell-off. Miners, banks and automakers fell between 2 and 3.6 percent.
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« It can get a bit bumpy, especially in the first half of the year, » said Matthias Scheiber, global head of multi-asset solutions at Wells Fargo Asset Management in London.
« The lockdown will have a negative impact , but we are generally positive about the value sectors as they are still cheap from a valuation point of view. «
Eurozone banks came under pressure as a member of the Governing Council of the ECB, Klaas Knot. The central bank could decide to lower its deposit rate further below zero if necessary to keep its inflation target in view.
There were few changes to the US Federal Reserve’s policy statement, due around 1900 GMT, but Fed chairman Jerome Powell would likely renew his commitment to ultra-light monetary policy.
Precious metals mining company Fresnillo Plc fell 13.0 percent after forecasting lower gold production for the current year.
The French luxury group LVMH was down 0.3 percent, although booming sales at fashion brands such as Louis Vuitton, especially in China, helped cushion the effects of the pandemic.
The Danish medical device manufacturer Ambu posted positive quarterly results by 23, 6 percent, while German health technology company Siemens Healthineers rose 3.1 percent after revising its sales and earnings outlook for 202 1.
In line with the Wall Street retail craze, drug maker Evotec rose 9.6 percent while other sharply shortened stocks like British publisher Pearson and cinema chain Cineworld soared for no clear reason / p> « If you look at some of the largest moving companies in Europe, they are certainly stocks that have been short-sold by hedge funds, » said Neil Campling of Mirabaud Securities.
« It’s difficult to know how exactly this will work, but given the volatility we are seeing in individual stocks, this is obviously very dangerous. «
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Associated title :
– Europe: German GDP downgrade and Coronavirus worries hammer stocks
Ref: https://www.businesstimes.com.sg
