European shares hobbled by record recession forecast

European shares ended slightly lower on Wednesday as a chilling GDP forecast undercut optimism about a swift economic recovery, even as several countries began easing coronavirus-related curbs.

The pan-European Stoxx 600 index ended down 0.4 per cent, having stuck to a tight range as the European Commission forecast the euro-zone economy would contract by a record 7.7 per cent this year. Adding to pressure were concerns over future asset-purchase programmes by the European Central Bank after a ruling by Germany's highest court on Tuesday gave the ECB three months to justify its stimulus schemes.

Dublin

Dublin's Iseq index fell along with its European peers, closing the session 1.3 per cent down at 5,308. Financials proved to be the main drag. Bank of Ireland and AIB were down 4 per cent and 10.5 per cent respectively on foot of the European Commission's forecasts, which included an 8 per cent contraction for Ireland. Permanent TSB performed better, dropping just 1.2 per cent, despite a warning from Davy analysts that it is set to slide back to a loss this year as the Covid-19 pandemic accelerates loan losses. The State's largest hotel chain Dalata fell 2 per cent even though chief executive Pat McCann said he was hoping to reopen the group's hotels in July. Dalata has temporarily shut 29 of its 44 hotels in Ireland and Britain, temporarily laying off more than two-thirds of its staff.

Ryanair fell again to €9.33 as did Paddy Power owner Flutter, which closed 2.7 per cent down at €106.50

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London

London’s top index steered clear of falling European stocks on Wednesday, ending the day more or less the same as it had started. The FTSE 100 finished up a tiny 0.07 per cent, or 4.34 points, to 5853.76. It is the second time this week that the index has remained more or less stable in the face of worse news on the continent. On Monday the FTSE dropped a mere 9.28 points, while Germany’s top index fell 3.6 per cent. The fall on the continent was not as pronounced on Wednesday.

In company news, Ocado shares hit an all-time high on Wednesday, ending the day up 5.6 per cent. The online supermarket revealed that retail revenues surged 40.4 per cent in the past two months. JD Sports rose 2.6 per cent even as the Competition and Markets Authority blocked its takeover of rival Footasylum for £90 million, which was agreed more than a year ago.

Virgin Money's shares joined those jumping despite news that on the face of it looked bad. The bank said that first-half underlying profits had more than halved after a £232 million hit it expects from bad coronavirus loans. Shares were up 4.4 per cent. ITV also joined the category, rising 3 per cent despite revealing that advertising demand had fallen 42 per cent in April.

Europe

Swedish oil firm Lundin Energy led sector losses after Norwegian rival Equinor offered to sell its 4.88 per cent stake in the firm. Norwegian oil firm Aker BP also dropped after announcing a cut in its quarterly dividend payments by two-thirds due to the pandemic and the plunge in crude prices. While European shares have climbed from lows touched in March, the Stoxx 600 has been largely rangebound over the past three weeks as investors look for tangible signs of the coronavirus pandemic slowing down. The threat of a renewed Sino-US trade spat has also weighed on sentiment. Travel and leisure stocks fell 1.8 per cent, while bank stocks shed more than 1.6 per cent.

New York

Wall Street’s main indices rose on Wednesday on hopes of a pick-up in business activity as states eased coronavirus-induced curbs, with investors also looking past a stunning 20 million plunge in US private payrolls last month.

In company news, General Motors jumped 6.3 per cent after the automaker topped first-quarter profit expectations and outlined plans for a May 18th restart of most of its North American plants. CVS Health gained 2.6 per cent after the company posted a better-than-expected first-quarter profit, as its pharmacy benefits management business and its drugstores benefited from customers stockpiling medicines due to Covid-19 lockdowns. Activision Blizzard rose 4.9 per cent after raising its revenue forecast on higher demand for video games such as its Call of Duty amid lockdowns. – Additional reporting: Reuters