FRANKFURT, Oct 29 ― German shares suffered their weakest day since early June yesterday as the government agreed on an emergency lockdown to combat surging Covid-19 cases, with other European markets following suit on fears of more curbs around the continent.
The German DAX sank as much as 5 per cent before cutting some losses to close down 4.2 per cent at its lowest in five months. The precise measures were still subject to negotiation, with sources saying the government had agreed to shut bars and restaurants from November 2.
The pan-European STOXX 600 index fell 3 per cent in its sharpest one-day drop in five weeks. France's main index dropped 3.4 per cent ahead of a televised address by President Emmanuel Macron at 8.00pm (1900 GMT) when he is expected to issue stay-at-home orders.
“News of renewed lockdown measures... will add further to growth concerns in the region, at a time when mobility indicators have already started to fall and survey indicators moderate,” said Mohammed Kazmi, portfolio manager for UBP's Absolute Return Fixed Income team.
“This will likely drive European Central Bank President (Christine) Lagarde to remain dovish in her comments in the press conference tomorrow, laying out the path for more easing to come down the line.”
Lagarde is due to speak at 1230 GMT today.
Ahead of that, the European Commission proposed new tax and trade measures yesterday to fight the pandemic around the EU, while sources said Germany aims to increase its debt plans next year to finance new coronavirus aid measures.
All sectors in Europe were firmly in the red, with the economically sensitive autos sector leading losses, down almost 5 per cent.
US stocks also tripped with surging cases there weighing on sentiment and no stimulus package in sight just a week ahead of the US presidential election.
The downbeat mood overshadowed a batch of upbeat quarterly results from European companies, with Deutsche Bank AG and retailer Carrefour down despite upbeat results.
German online takeaway food company Delivery Hero and industrial technology group Hexagon, however, were among the rare gainers after robust earnings reports.
Aero-engine maker Rolls-Royce, meanwhile, soared 12.5 per cent a day after shareholders approved a £2 billion (RM10.8 billion) rights issue to bolster its finances. ― Reuters
