Stocks declined across the world on Friday as a series of closely watched indicators from the continent’s critically important services sector offered a window into the severe economic effects of the coronavirus pandemic.
Purchasing managers index’ (PMI) readings from Italy, France, Germany, Spain, and the UK plunged to an all-time record low in March, after the countries moved into lockdown in order to curb the spread of the virus.
At 26.4, the final reading from the 19-member eurozone came in sharply lower than an earlier preliminary estimate, signalling widespread contraction across the common currency area.
The pan-European STOXX 600 index (^STOXX) fell by around 0.3%, while stocks in the US whipsawed following the release of jobs data, which showed the first monthly decline in employment since September 2010.
In the UK, where a PMI reading of 34.5 signalled the steepest downturn for the services sector since the survey began in 1996, London’s FTSE 100 (^FTSE) was down by 0.8%.
In Italy, where a PMI reading of 17.4 signalled an particularly steep decline, stocks on the FTSE MIB Index (^FTSEMIB.MI) fell by around 1.5%.
“That’s not a contraction — that’s an economic collapse, and utterly tragic,” said Michael Hewson, the chief markets analyst at CMC Markets.
“Nonetheless with the lockdowns likely to be extended to encompass the whole of April, today’s numbers are likely to be the beginnings of even more significant economic challenges in the weeks ahead,” he said.
The US Labor Department said on Friday that non-farm payrolls — a signifier or private sector employment — dropped by 701,000 in March.
The data, which was collected before widespread restrictions were introduced in the US, also showed that the US unemployment rate rose to 4.4%, its highest level since August 2017.
The declines in Europe and the US followed a weak trading session in Asia.
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