(Bloomberg) -- European equities slumped amid concerns that the coronavirus epidemic is crimping growth prospects in China and threatening the global economy as a result.
The Stoxx Europe 600 retreated 0.9%. The decline was led by oil and gas as well as technology shares. Royal Dutch Shell Plc dropped 3.9% as it slowed the pace of share buybacks and profit missed expectations. Luxury stocks were also hurt, with LVMH Moet Hennessy Louis Vuitton SE falling 1.7%.
After rallying 23% last year, European equities have had a volatile start to 2020 after the rapid spread of China’s coronavirus started threatening growth in the world’s second biggest economy, to which many European companies have strong ties. Economists have started cutting forecasts as Chinese authorities tighten travel restrictions and lock down cities, while companies have suspended their China operations. European investors are also carefully watching earnings reports to gauge the outlook among major corporations.
“Coronavirus remains the main story, in particular what economic implications it will have,” said Ulrich Urbahn head of multi-asset strategy and research at Joh Berenberg Gossler & Co. “In the short term, markets remain clearly vulnerable given positioning and valuation. In the mid-term, a correction could be a good buying opportunity given that equities have become even more appealing versus bonds.”
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