European stocks stumbled on Wednesday amid growing investor unease over the extent of economic damage to come from the coronavirus pandemic, and as a difficult earnings season was getting under way.
Extending opening losses, the Stoxx Europe 600 index
SXXP,
-2.17%
fell 1.3% to 329.36, setting it up to break a five-session win streak. The German DAX 30
DAX,
-2.52%
and French CAC 40
PX1,
-2.32%
each fell around 1.7%, while the FTSE 100 index
UKX,
-2.41%
dropped 1.5%.
Recent gains in Europe and the U.S. have been driven by optimism that Western governments are getting a handle on the deadly pandemic. But overshadowing that was a warning from the International Monetary Fund on Tuesday that this year would see worst global growth year since the Great Depression.
U.S. stocks were also set for a weaker start, with Dow industrial futures
YM00,
-2.11%
last down 346 points, or 1.4%, to 23,545.
Earnings season was getting under way, with initial glimpses of enormous challenges companies are facing against the backdrop of the pandemic. JPMorgan Chase
JPM,
-2.74%
said on Tuesday it had set aside $8.3 billion in provisions for loan losses, given the likelihood of a severe recession. Bank of America
BAC,
-0.79%,
Citigroup
C,
-2.69%
and Goldman Sachs
GS,
-0.53%
will all report on Wednesday.
In Europe, shares of Adidas
ADS,
-1.88%
fell nearly 3% after the German sportswear maker said it would receive a €3.0 billion ($3.2 billion) government-backed loan and suspend dividend payments. The company spoke of a “severe impact on its revenue and cash generation in most other parts of the world since mid-March,” in addition to difficulties in its China markets since end-January.
Energy companies were leading on the downside, as Brent
BRNM20,
-3.68%
and U.S. crude oil
CL.1,
-2.28%
prices fell by 3.5% and 2.5%, respectively. The International Energy Agency on Wednesday predicted a record fall in oil demand in April and rapidly filling crude storage as coronavirus shutdowns have crushed demand for the commodity.
Shares of Total
FP,
-5.58%
TOT,
-2.29%,
Royal Dutch Shell Group
RDS.A,
-0.96%
RDS.B,
-0.90%
and BP
BP,
-1.88%
BP,
-5.13%
fell around 4% each.
