European stocks lose ground on worries over speed of recovery

European stocks slumped on Thursday on worries the global economy won’t rapidly bounce back after the lockdowns from the coronavirus pandemic. The Stoxx Europe 600, fell 1.6%, after a rough Wall Street session following the grim outlook from Federal Reserve Chairman Jerome Powell.

The German DAX dropped 1.5%, the French CAC 40 fell 1.8% and the U.K. FTSE 100 skidded 2.1%. Through Wednesday’s trade, the Stoxx 600 is still up 19% from the lows of March.

“[Powell’s] words were a blow to the optimism that had been building in the markets over the last few weeks as the relaxation of social distancing restrictions in the United States and elsewhere had generated expectations of a V-shaped recovery from the virus crisis,” said Raffi Boyadjian, senior investment analyst at XM.

As countries gradually open up, one concern is that while the outbreak curve has flattened it has not diminished, which leaves little room for governments to maneuver if infections accelerate.

Geopolitical tensions were apparent as the U.S. accused China of trying to steal vaccine information while France objected to one of its drugmakers, Sanofi SAN, -2.23%, saying it would give U.S. priority to a coronavirus vaccine.

Of stocks on the move, Jerónimo Martins shares dropped 13% after the operator of supermarkets in Portugal, Poland and Colombia cut its dividend and withdrew guidance. Analysts at Jefferies said April sales were “weak,” particularly at its Pingo Doce and Ara stores. Straumann Group dropped 10% as the Swiss dental products company announced 660 job cuts. Hargreaves Lansdown climbed 5% as the U.K. investment firm reported net new business of £4.0 billion in the four months ending April 30. Futures on the Dow Jones Industrial Average fell 28 points, ahead of jobless claims data due at 8:30 a.m. Eastern.

European stocks lose ground on worries over speed of recovery, MarketWatch, May 14