The Business Times

Europe: Pandemic worries weigh on shares

Published Fri, Mar 26, 2021 · 06:11 AM

[BENGALURU] European stocks ended lower on Thursday as fears over extended coronavirus restrictions in the eurozone sparked a flight from energy and financial stocks to firms seen as safer during heightened economic uncertainty.

The pan-European Stoxx 600 index slipped 0.3 per cent, weighed down by a drop in oil and gas stocks on the back of weaker crude prices, and bank stocks as bond yields declined.

The benchmark index pulled back from 13-month highs last week as a new wave of coronavirus infection and a fresh regional lockdowns overshadowed a surprisingly strong recovery in March business activity.

Stocks in London underperformed their regional peers as the European Union mulled the possibility of blocking shipments to countries with higher inoculation rates such as Britain, or which are not sharing doses they produce.

"A decision to limit (vaccine) flow could severely hamper the UK reopening timeline," said Joshua Mahony, senior market analyst at IG.

"With the UK clearly well ahead of EU nations in the vaccination drive, there is a real risk that politicians such as Angela Merkel push for action as their popularity wanes."

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Wall Street was weighed down by technology stocks, as investors shrugged off better-than-expected jobless claims data while awaiting US President Joe Biden's first formal White House news conference.

Quarter-end portfolio rebalancing by institutional investors also added to the downward pressure on stocks, analysts said.

Germany's DAX ended marginally higher on a boost from auto stocks led by Volkswagen after the company forecast 2021 results would match previous year's level.

Earlier in the session, the DAX has fallen as much as 1.3 per cent as the number of coronavirus cases in the country saw the biggest increase since Jan 9.

H&M dropped 1.6 per cent after at least one Chinese online retailer appeared to drop its products following social media attacks on the Swedish company for saying it was "deeply concerned" about reports of forced labour in Xinjiang in China.

Shares of German sportswear firm Adidas, which also came under fire in China, was down 6 per cent.

Cineworld slumped 7 per cent after it reported a US$3 billion loss for 2020 and said it will ask shareholders to approve a raise in its debt ceiling.

Gains in defensive sectors such as utilities, telecoms and food & beverage, which tend to decouple from the economic cycle, offered some support to the market.

REUTERS

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