European shares drop as manufacturing crash spells more pain

European shares ended Wednesday lower amid increasingly dire economic readings due to coronavirus, while bank stocks plummeted as several majors suspended dividend payments.

DUBLIN

It was a grim day for markets across Europe, and Dublin was no exception. The Iseq index closed down more than 3 per cent, with only a handful of stocks staying positive.

Bank shares took a hammering with AIB losing 7.4 per cent and Bank of Ireland down 3.4 per cent.

Reits were also negative, with the country's largest landlord Ires losing over 8 per cent and Hibernia 6.7 per cent lower.

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Airlines lost ground across Europe, with Hungary-based Wizz Air down 9 per cent after saying it was to continue with its jet delivery plan. IAG and EasyJet were down between 6 per cent and 7 per cent. Given this Ryanair did relatively well, closing 4 per cent lower.

Other big fallers on the day in Dublin included Kingspan and Glanbia, down 4 per cent and 8 per cent respectively. Bucking the downward trend was Origin, up 8.6 per cent, although this was with low volumes traded.

LONDON

London’s stock markets tumbled on Wednesday as banking shares dived after suspending dividend payments, while plunging factory activity in Britain and elsewhere underlined the severe economic impact of the coronavirus pandemic.

Shares of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered dropped between 5 per cent and 12 per cent, dragging the FTSE 100 lower by 3.8 per cent.

Oil major BP fell 3.1 per cent after rating agency Moody's cut its outlook to "negative". The company also slashed its 2020 spending plan by 25 per cent, and will reduce output from its US shale oil and gas business in the wake of a collapse in oil prices.

Online car market place Auto Trader dropped 11 per cent after saying it would sell new shares worth 5 per cent of its capital to shore up its finances and liquidity position.

EUROPE

The pan-European STOXX 600 index closed 2.9 per cent down, with Tuesday’s session rounding off its worst quarter in nearly 18 years during which it lost about $2.8 trillion in market value.

A survey showed that euro zone manufacturing activity collapsed in March, with analysts predicting that prolonged disruptions in the sector could have a lasting, deep-seated impact on the economy.

Bank stocks were among the worst performers for the day, dropping 5.8 per cent. Travel and leisure stocks dropped 6.4 per cent, negating the prior session’s gains.

Cruise operator Carnival sank around 20 per cent after ratings agency Moody's downgraded the firm's senior unsecured rating.

Italian tyre-maker Pirelli dropped 6.3 per cent, ranking among the worst performers on the country's benchmark, after its head shot down talks of a merger with brake-maker Brembo.

WALL STREET

The Dow Jones tumbled more than 700 points in early trading on Wednesday as investors fled to safe-haven assets after new orders for US-made goods plunged to an 11-year low and private payrolls fell for the first time since 2017.

Consumer staples stocks, utilities and real estate, which are considered stable during times of extreme volatility, fell between 1 per cent and 7 per cent.

Airlines, hotels and cruise operators shed between 5 per cent and 7 per cent. The energy sector shed another 3 per cent, with experts now saying oil prices could touch single digits, exacerbated by a share tussle among top producers as the world runs out of storage space.

The collapse in oil prices brought about its first major casualty with Whiting Petroleum filing for Chapter 11 bankruptcy protection. Its shares slumped 42 per cent. – Additional reporting: Reuters