Monday 9 December 2019

European shares drop to 13-month low amid gloom

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters

European stocks had fallen to a 13-month low by mid-afternoon yesterday as results from companies including Zurich Insurance and Royal Dutch Shell exacerbated investor concern about global growth.

By mid-afternoon in Dublin, the ISEQ Overall Index was down 3.26pc, or 207.24, points to 6,159.09.

The leaders on the Dublin index included Hibernia Reit, which was up 0.2pc to €1.27, while AIB increased 1pc to €4.90.

On the other side of the board, the laggards included packaging giant Smurfit Kappa, which was down 5.3pc to €21.41, while building materials group CRH had lost 4pc to €22.74.

Elsewhere, the Stoxx 600 erased Tuesday's rebound, tumbling 3.1pc to 322.74.

Concern that a slowdown in China will spread and plunging oil prices have weighed on investor sentiment, dragging the European gauge down 12pc this year and into a bear market last week. Oil extended its drop from the lowest close in more than 12 years yesterday.

The VStoxx Index measuring volatility expectations for euro-area shares jumped 13pc.

Zurich Insurance slid 11pc after predicting a second straight quarterly loss for its biggest unit. Shell lost 6.4pc after saying quarterly profit plunged as the rout in oil deepened.

Seadrill plummeted 29pc as Bank of America cut its rating to the equivalent of sell.

BHP Billiton dragged a gauge of commodity producers to the worst performance on the Stoxx Europe 600 Index, falling 8pc after trimming its full-year iron-ore output forecast.

"The oil sector is weighing prominently as the market is pricing in lower oil, which means lower demand and slower growth," said Michael Woischneck, an equities fund at Lampe Asset Management in Dusseldorf, Germany.

"I'm sitting on my cash, not buying right now, because we think it can get worse. We see a worst case of another 10pc down."

The Stoxx 600 broke below its 200-week moving average at 324.15, hitting its lowest level since December 2014. Still, sentiment is so negative that technical indicators are not enough to trigger a rebound, according to Saxo Bank trader Andrea Tueni.

Germany's DAX Index slid 2.8pc to its lowest level since September as export-oriented stocks dropped. Volkswagen fell 4.2pc and steel producer ThyssenKrupp fell 3.3pc.

Commerzbank and Deutsche Bank also contributed to declines, with losses of at least 5pc.

Among other equities moving on corporate news yesterday, Vinci lost 3.9pc following a report that it has held talks to acquire Abengoa's largest unit.

Banca Monte dei Paschi di Siena SpA tumbled 19pc, leading a gauge of banking stocks lower, as the chief executive officer of Intesa Sanpaolo ruled out an acquisition of its Italian peer. (Bloomberg)

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