European stocks closed sharply lower on Monday (January 27) as concerns grew about the economic impact of an outbreak of the coronavirus outbreak in China. The pan-European Stoxx 600 index closed down 2.3 per cent, its biggest one-day drop since October 2, 2019. China-influenced underlying resources sectors fell 4.3 per cent, leading the decline, with all sectors and major exchanges trading stable in the negative zone.
Chinese officials have confirmed more than 2,800 new cases of the coronavirus, raising the death toll to 81 and 461 in critical condition. The virus has been detected in several other countries, including Asia and the United States, including the United States, France, Australia and Canada.
Traditional safe-haven assets, such as gold and the yen, rose sharply as investors sought to avoid risk as markets shrouded markets in the shadow of the SARS crisis of 2003.
On Monday, Wall Street fell sharply, with the Nasdaq down nearly 2 percent.
In Europe, the latest survey by the Ifo Institute showed that German business confidence deteriorated in January, falling to 95.9 from 96.3 in December, below the consensus forecast of 97.0, with the stock market showing further downward momentum.
The German Institute for Economic Research also predicts that Germany, Europe’s largest economy, could grow by 0.2% in the first three months of 2020 as demand in the ailing industrial sector slowly recovers.
In corporate news, the Swiss Financial Markets Regulatory Authority (FINMA) is investigating the role of Credit Suisse’s board in the bank’s recent spying scandal, sources said.
In early trading, travel stocks fell sharply, with Air France KLM down 5.6 per cent and British Airways parent company International United Airlines Group fell 5.4 per cent and London-listed Easyjet fell 5 per cent.
Shares in CNH Industrial fell 7 per cent on Monday to close at the bottom of Europe’s benchmark stock index.
There were few gains in the Stoxx 600, with Wienerberger’s shares rising just 1.5 per cent to top the list.
Shares in The Capital Group Company rose nearly 1 per cent in London after Capital Group Companies increased its stake in the Abu Dhabi-based hospital chain.