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Europe: Stocks 'take a breather' as earnings soothe selling fever
[BENGALURU] European stocks "take a breather" as earnings soothe selling European shares ended flat on Wednesday, recouping all of the day's losses as strong utility and automobile earnings helped somewhat distract markets from the coronavirus outbreak.
Spanish electricity provider Iberdrola SA led gains in utilities after posting robust annual profit growth, while French carmaker Peugeot SA topped the auto sector after a strong 2019.
The main European equity benchmark Stoxx 600 closed largely unchanged after dropping as much as 2.9 per cent to a four-month low earlier in the session. Analysts suggested that investors were exercising some restraint after an extended sell-off over the prior sessions.
"We've had quite a lot of aggressive selling, but at the moment, because there aren't any reports of further outbreaks, or anything we're not familiar with, (the market) seems to have taken a bit of a breather to see what kind of damage is being done" said Michael Baker, an analyst at ETX Capital in London.
The Stoxx 600 has shed roughly US$700 billion in value this week as the coronavirus' spread to shores beyond China prompted a swift reassessment of its economic impact.
Utilities and automobiles were the best performing sectors for the day. Gains in Peugeot spilled over to Italy's Fiat Chrysler, which is set to merge with the French carmaker.
On the other hand, travel stocks were the worst hit sector. The subindex has lost more than 9% so far this week, with airline stocks bearing the bulk of losses.
Resource and oil stocks also dropped as concerns over Chinese demand dented commodity prices.
The losses followed a grim session for Asia and Wall Street overnight after US health officials warned that Americans should prepare for a possible spread of the virus. Wall Street however, attempted a recovery in early trade on Wednesday.
Italian stocks bounced back from a near three-month low, snapping a four-day losing streak spurred by a coronavirus outbreak which has made the country the worst-hit in Europe.
British engineering company Weir Group topped the Stoxx 600 with a 11 per cent rise after its annual core earnings topped expectations.
The biggest decliner on the Stoxx 600 was Danish services company ISS, slumping 15 per cent to a record low after it warned on its 2020 profit.
Latest data from Refinitiv shows European companies are expected to report a 1.2 per cent fall in profits in the fourth quarter, a bigger drop than previously expected, which would keep them stuck in a year-long earnings recession.