UK Markets closed

Stocks - Europe Dragged Lower by Virus Fears; ASOS and STMicro Shine

By Peter Nurse - European stock markets weakened Thursday, weighed by losses in Asia as the battle to contain the spread of a deadly virus intensifies.

At 06:15 ET (1015 GMT), the DAX traded 51 points, or 0.4% lower. France's CAC 40 was largely unchange, while the FTSE 100 in the U.K. dropped 18 points, or 0.2%. The STOXX 600 benchmark fell 0.2% to 422.30.

In China, the Shanghai Composite closed 2.8% lower and the Shanghai Shenzhen CSI 300 dropped 3.5%. Hong Kong’s Hang Seng Index lost 1.8% by the close.

Earlier Thursday, China issued a travel suspension in Wuhan, a city of 11 million at the center of the outbreak of the coronavirus, as its latest attempt to stop the spread of the disease. The virus has killed at least 17 people and infected hundreds of people in China, and as far afield as the U.S., Thailand, Taiwan, Japan and the Republic of Korea. This has sparked fears of a pandemic.

In corporate news, shares in STMicroelectronics (PA:STM) climbed over 7% as investors took a positive view of its higher sales even as net profit for the fourth quarter fell year-on-year.

Shares in online fashion house ASOS (LON:ASOS) climbed around 5% after it posted strong sales figures for the holiday period. The retailer has had a difficult year, issuing two profit warnings, but it stated overall sales grew 20% in the four months to the end of December.

However, the sectors most exposed to the Chinese consumer suffered.

Luxury stocks were hard hit, with Burberry (LON:BRBY) down 1.4% a day after releasing its latest sales figures. High fashion house Hermes (PA:HRMS) dropped 0,5% while puffa jacket maker Moncler (MI:MONC) fell 2.4%.

Airlines also fell, with Air France-KLM (PA:AIRF) down 1.4%,SAS (ST:SAS) off 1.2% and IAG (LON:ICAG), the parent company of British Airways, among others, down 2.6%.

Later Thursday, the European Central Bank meets and is widely expected to keep interest rates on hold--at -50 basis points and 0 bp for the deposit rate and the main refinancing rate, respectively--and quantitative easing at 20 billion euros ($22 billion) a month.

The main focus will be on the strategic review promised by ECB President Christine Lagarde, in her second meeting in this role.

“We expect her to give more details as to the parameters that will be included in the review,” according to analysts at Nordea, in a research note, “but she will not jump to any conclusions ahead of the process.”

Elsewhere, the price of oil has retreated sharply after the American Petroleum Institute reported that crude inventories rose last week, by 1.6 million barrels, adding to the picture of an oversupplied market. Official government data are due at 10:30 AM ET.

At 5:00 AM ET (1020 GMT), U.S. crude futures traded 1.7% lower at $55.77 and the international benchmark Brent contract fell 1.4% to $62.31. Gold futures for February delivery on New York’s COMEX was 0.3% lower at $1,553.45.

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