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Stocks - Europe Slumps; Gloomy Fed Prompts Selling

Stock MarketsJun 11, 2020 04:03AM ET
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© Reuters.

By Peter Nurse 

Investing.com - European stock markets slumped Thursday, as the gloomy assessment of the economic outlook by the U.S. Federal Reserve prompted investors to take profits after the sector’s strong run.

At 4:05 AM ET (0805 GMT), the DAX in Germany traded 2.8% lower, France's CAC 40 fell 3%, the U.K.'s FTSE index was down 2.6%, while the broad-based Stoxx Europe 600 index dropped 2.5%.

European equities have undergone a hefty rally from the depths of the coronavirus crisis, with the Stoxx Europe 600 index posting gains of over 30% from its March lows.

However, the downbeat assessment of the economic outlook of the world’s largest economy by the Federal Reserve, its first since the coronavirus outbreak, has prompted broad profit taking.

“Overall, the Fed thinks the road to recovery has begun, but it is a long run. And it is not V-shaped one,” said analysts at Nordea, in a research note to clients.

Many of the decliners Thursday are those stocks which were very hard hit at the start of the coronavirus-inspired declines, including airline Deutsche Lufthansa (DE:LHAG), travel agent Tui (DE:TUIGn) and retailer Hugo Boss (DE:BOSSn).

Elsewhere, Just Eat Takeaway (AS:TKWY) rose 1.3% after announcing its $7.3 billion deal to buy U.S. meal-delivery service GrubHub (NYSE:GRUB). Just Eat had dropped 13% on Wednesday as The Wall Street Journal had reported the deal was close. 

Additionally, eye will be on the Eurogroup meeting later Thursday, where the region’s finance ministers are expected to discuss the EU recovery fund. 

“Given the differences between the EU commission and e.g. the Netherlands and Austria, the proposal for the recovery fund needs some work before it can be passed in the various parliaments,” said Danske Bank, in a research note.

Oil prices slumped Thursday, weighed by the Fed’s grim assessment of the economic outlook as well as increased fears of a supply glut.

U.S. crude stockpiles rose by 5.72 million barrels last week to 538.1 million barrels, the Energy Information Administration forecast late Wednesday, against expectations of a 1.738 million-barrel draw.

EIA’s call followed the American Petroleum Institute prediction of a whopping 8.4 million-barrel build on Tuesday, increasing fears of an oversupply.

At 4:05 AM ET, WTI Futures traded 3.8% lower at $38.11 a barrel. The international benchmark Brent contract fell 3.4% to $40.33.

Elsewhere, gold futures rose 1.3% to $1,743.75/oz, while EUR/USD traded at 1.1370, largely unchanged.

 

Stocks - Europe Slumps; Gloomy Fed Prompts Selling
 

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Comments (10)
Cesar Cury
Cesar Cury Jun 11, 2020 6:43AM ET
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EURUSD need correction, the price is to high now
Camaro Camero
Camaro Jun 11, 2020 6:26AM ET
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Looks like another ugly day ahead of us boys. I really thought yesterday was going to pull through in the afternoon. Selling and taking losses or going long and waiting for possibly months/years. What's your plan?
RF RF
RF RF Jun 11, 2020 6:26AM ET
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Take profit. This is going down.
RF RF
RF RF Jun 11, 2020 6:26AM ET
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Take profit. This is going down.
alex gallegos
alex gallegos Jun 11, 2020 6:26AM ET
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Keep investments. This is going up. I know what I'm talking about.
Katrina Zarkova
Katrina Zarkova Jun 11, 2020 6:25AM ET
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correction incoming
Nirbhay Kulkarni
Nirbhay Kulkarni Jun 11, 2020 6:12AM ET
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relaxasation
Nirbhay Kulkarni
Nirbhay Kulkarni Jun 11, 2020 6:11AM ET
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whatever Fed said is nothing new, we all know, its economy halt not stressed, how this halt will be accelerated is not in control of Fed it's under administration, if administration fuels start then within month Fed will come up with revised outlook.Fed didn't entered negative rate it was better decision rather govt. to decide other financial relaxations.
Ricardo Diogo
Rcd72 Jun 11, 2020 5:42AM ET
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will Dow go down to 23000?
James Dorward
James Dorward Jun 11, 2020 5:42AM ET
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Anything can happen. We could see it go back to 18,000 OR we could see it go to 32,000 by year end. Not quite sure yet.
James Dorward
James Dorward Jun 11, 2020 4:47AM ET
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I thought it was reopening? looks like much worse than they said. now what?
Magno Fernandes
Magno Fernandes Jun 11, 2020 4:43AM ET
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fasten seat belt, the pilot is gone.
James Dorward
James Dorward Jun 11, 2020 4:35AM ET
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How far down is it going now?
Ron Raymond
Ron Raymond Jun 11, 2020 4:35AM ET
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I was prepared fortunately, my shorts are finally at work. Looking forward to today, let us traders get back to realty and be real up or down, market manipulation can get rather over blown.
RF RF
RF RF Jun 11, 2020 4:33AM ET
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Here it comes. Get cash ready.
Camaro Camero
Camaro Jun 11, 2020 4:33AM ET
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Always! Let's hope we will look back at this as the time period we made our future fortunes. Good luck to all.
 
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