Global shares tumbled further amid increasingly dire economic readings due to the coronavirus, while bank stocks plummeted as several major lenders suspended dividend payments.
The pan-European Stoxx-600 index closed 2.9% down, having, on Tuesday, rounded off its worst quarter in nearly 18 years during which it lost about $2.8 trillion (€2.6tn) in market value.
A survey showed that eurozone manufacturing activity collapsed in March, with analysts predicting that prolonged disruptions in the sector could have a lasting, deep-seated impact on the economy.
“Because business activity and production have been slashed to extremely low levels, and containment measures still have to prove their effectiveness, most firms are confronted with a dramatic fall in revenues, which is bound to lead to a rapid rise in unemployment,” said Davide Oneglia, economist at TS Lombard.
“We expect a severe recession in the euro area in the first half and only a modest recovery thereafter.”
Profit for companies listed on the Stoxx-600 is now expected to slide by a fifth in the second quarter, deepening a European corporate recession, while dividends paid by those firms are forecast to fall by about 40%.
Bank stocks were among the worst performers for the day, dropping 5.8%.
Travel and leisure stocks dropped 6.4%, negating the prior session’s gains.
A fall in stocks across the Atlantic also rattled investors, as the impact of the outbreak was reflected in a batch of poor economic readings from the world’s largest economy.
US stocks started the second quarter of the year with deep losses as investors braced for a longer economic shutdown that’s likely to devastate corporate profits and dividends.
The S&P 500 fell for the third time in four days, with sentiment souring after US officials gave sobering assessments of the pandemic’s potential impact. US president Donald Trump warned of a “painful” upcoming period for the country, while New York governor Andrew Cuomo said a model showed the Covid-19 outbreak may not peak in the state until the end of April.
- Reuters and Bloomberg