European stocks muted after virus driven sell-off

The pan-European Stoxx 600 erased a positive open to hover below the flatline by mid-morning. Telecoms stocks added 0.8% to lead gains while tech stocks dropped 1.1%.

Markets had shown some signs of stabilization after the Stoxx 600 dropped 2.3% on Monday, with around 180 billion euros of market value wiped out, but sentiment remains tied to news out of China.

As of Tuesday morning, Chinese health authorities have confirmed that 106 people have died with 4,515 now infected, with cases reported in multiple countries around the world.

Stocks in Asia retreated on Tuesday, with South Korea’s Kospi closing down 3.09% while Singapore’s Straits Times index fell 2.17%. Japanese shares also retreated, while markets in China and Hong Kong are closed for the prolonged Lunar New Year holidays.

Back in Europe, Brexit is back in focus with the U.K. set to leave the European Union on Friday, beginning a transitional period in which both sides work toward the ambitious target of agreeing a new free trade agreement this year.

EU chief negotiator Michel Barnier warned the U.K. on Monday that the bloc will “never, never, never” compromise on the single market, accusing Britain of underestimating the cost of leaving.

In corporate news, Renault’s board is set to meet Tuesday to approve the appointment for former Seat boss Luca de Meo as its next CEO, according to Le Figaro newspaper.

Stocks on the move

Earnings are in focus, with Europe’s most valuable technology company SAP on Tuesday raising its revenue and profit outlook and reporting an increase in fourth-quarter net profit. Market reaction was muted, however, with SAP shares slipping 2.7%.

British luxury fashion house Burberry slid 3.5% amid concerns over hits to its Asian business resulting from the coronavirus outbreak.

At the top of the European benchmark, Swedbank climbed 6.2% after reporting better-than-expected fourth-quarter profits before the bell, while French corporate services provider Edenred added 4.8% after brokerage ODDO upgraded the stock to “buy,” according to Reuters.

source: CNBC


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