European shares slipped from all-time highs on Friday, as investor sentiment was dulled by underwhelming corporate earnings reports and the rising death toll from the 2019 novel coronavirus outbreak.
The pan-European STOXX 600 fell 0.2 percent, snapping a four-day winning streak, as the number of deaths from the outbreak climbed to 636 and several more companies suspended operations in China.
“We are probably going to see companies caution that sales have been hit as people are not going out to shops to buy and that is going to ripple through,” CMC Markets market analyst David Madden said.
British fashion brand Burberry Group PLC fell 1.8 percent after flagging a slide in demand from China and Hong Kong due to the outbreak.
China-exposed sectors, such as basic materials, luxury and auto stocks, which have seesawed over the past two weeks on virus fears, were the biggest decliners on the day.
Sentiment this week had so far been buoyed by a spate of strong earnings updates and China’s attempts to limit the economic fallout of the outbreak, helping the main index recover from a 3 percent slump last week.
Despite Friday’s declines, the STOXX 600 posted its best week since December 2016 with a 3.3 percent increase.
Swiss lender Credit Suisse Group AG slumped 3.6 percent on Friday after its chief executive officer Tidjane Thiam stepped down following a spying scandal.
Miner Norsk Hydro ASA tumbled 10 percent after missing quarterly profit estimates, while Belgian materials and recycling group Umicore SA fell after an RBC downgrade to “hold.”
Economic data from the bloc this week had raised hopes that a slowdown might be bottoming out, but latest numbers showed German industrial output registered its biggest drop in more than a decade in December last year.
“The data has raised the risk that next week’s GDP data could bring back the R-word for the German economy,” said Carsten Brzeski, Germany chief economist at ING, referring to fears of a looming recession.
Cosmetics maker L’Oreal SA and fertilizer maker Yara International ASA rose 6.7 percent and 4.9 percent respectively after posting better-than-expected quarterly profits.
Technology firm Ericsson AB topped the pan-regional index after majority owner Cevian Capital said a US interest in buying a stake would be positive, following comments from the US Attorney General on Thursday that the country should consider taking a “controlling stake” in the company.
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
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