By Peter Nurse
Investing.com - European stock markets traded sharply lower Wednesday, with investors concerned that the surge in Covid-19 cases will prompt a new wave of lockdowns, stifling the region’s already tepid recovery.
At 3:50 AM ET (0850 GMT), the DAX in Germany traded 3.2% lower, the CAC 40 in France fell 3.1%, while the U.K.'s FTSE index dropped 2.1%.
Many European countries have reported soaring infection rates, as the second wave of the Covid-19 virus hits hard, aided by the onset of cold, damp winter weather. Restrictions have had a limited effect to date, prompting fears of more draconian measures.
French President Emmanuel Macron is set to give a televised address on Wednesday evening, with local media reporting that the government is considering imposing a lockdown from midnight on Thursday.
Similarly, the Belgian government will convene on Friday to decide on a potential new national lockdown, while Spain has already announced a state of emergency for six months.
In corporate news, Deutsche Bank (DE:DBKGn) returned to quarterly profit, helped by a strong performance from its investment banking arm. However, its stock fell 3.8%, swept up in the general Covid-induced malaise.
Puma (DE:PUMG) also reported positive news, with the German sports goods retailer reporting that its third-quarter sales and profit rose, but it declined to provide guidance for the year given the general uncertainty. Its stock fell 4%.
In the UK, Next (LON:NXT) upgraded its profit guidance for the year as its full price sales rose in the third quarter. Yet its stock still fell 0.6%.
LVMH (PA:LVMH) stock fell 2.8%, outperforming the wider sector following a report that the French luxury goods giant may have to pay less than originally agreed upon to buy U.S. jeweler Tiffany (NYSE:TIF).
Elsewhere, the travel sector was hard hit by the idea of further lockdowns, with Air France KLM (OTC:AFLYY) stock down 6.7%, Ryanair (LON:RYA) down 7.2% and Lufthansa (DE:LHAG) 5.8% lower.
Oil prices slipped sharply Wednesday, as a jump in U.S. crude stocks, coupled with the potential damage to demand from the incessant increase in Covid-19 cases, raised worries about a supply glut.
Data from the American Petroleum Institute late Tuesday showed a build of 4.577 million barrels for the week ending Oct. 23, more than the 1.2 million barrels expected, while gasoline inventories also rose. Government data are expected later Wednesday.
Traders will also keep an eye on the arrival of Hurricane Zeta, which is expected to make landfall in Louisiana later Wednesday.
U.S. crude futures traded 3.7% lower at $38.09 a barrel, while the international benchmark Brent contract fell 3% to $40.38.
Elsewhere, gold futures fell 0.4% to $1,904.95/oz, while EUR/USD traded 0.3% lower at 1.1761.