Stocks - Europe Slumps; Hugo Boss, EasyJet Outperform

  • Stock Market News
Stocks - Europe Slumps; Hugo Boss, EasyJet Outperform
Credit: © Reuters.

By Peter Nurse - European stock markets slumped Tuesday, amid worries over a new pneumonia-like virus in China and the impact this could have on global growth.

At 04:15 ET (0910 GMT), the DAX traded 69 points, or 0.5% lower. France's CAC 40 was down 58 points, or 1%, while the FTSE 100 in the U.K. dropped 84 points, or 1.1%, weighed by disappointing corporate news. The pan-eurozone Euro Stoxx 50 fell 30 points, or 0.8%.

The outbreak of the disease, which has spread from the central city of Wuhan, is still in its early stages. However, there have been four confirmed deaths and it comes right before the peak travel season during the Lunar New Year holidays, raising risks that it could spread further.

This all prompts fears of a repeat of the 2002 SARS pandemic. On that occasion more than 8,000 people across 37 countries were affected, with around 800 deaths. A 2003 academic study estimated the global economic cost at close to $40 billion.

In corporate news, shares in UBS (NYSE: UBS ) dropped 5% after the Swiss banking giant missed its full-year profitability and cost targets and cut its mid-term goals. Rivals HSBC and Standard Chartered (LON: STAN ) are also both over 2% down given their strong links to the Asian markets.

National European airlines are lower amid fears travel to Asia will be hit hard. Deutsche Lufthansa (DE: LHAG ) was hit hardest, down 2.2%, while Air France KLM (PA: AIRF ) dropped 1.7%. However, low-cost airlines pushed higher, helped by strong revenue news from EasyJet (LON: EZJ ) in the first quarter. Its shares climbed 4.9%.

The luxury sector has also been hard hit, amid worries the traditional demand seen from Asia will be hit by the health outbreak. The exception was, Hugo Boss (DE: BOSSn ) which rose over 4% after its first positive update in a year. Last year was tricky for the German fashion house so this report may prove to be an inflection point.

Elsewhere, U.S. President Donald Trump is set to deliver a speech at the World Economic Forum in Davos, Switzerland, while economic releases mainly consist of U.K. employment numbers at 4:30 AM ET (0930 GMT) and the German ZEW Economic Sentiment release at 5:00 AM ET (1000 GMT),

At 4:20 AM ET, U.S. crude futures traded 1.1% lower at $57.94 and the international benchmark Brent contract fell 1.2% to $64.39. Gold futures for February delivery on New York’s COMEX were 0.3% lower at $1,555.85.

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