European stocks fell sharply Thursday; The biggest movers
European stocks fell sharply Thursday as investors digested the latest comments from the U.S. Federal Reserve and fears of a second wave of coronavirus infections.
The pan-European Stoxx 600 dropped 2.9% by the afternoon, with autos plunging 5.5% as all sectors and major bourses tumbled into negative territory.
Investor reaction to the Fed’s latest economic forecast was in the spotlight Thursday. The U.S. central bank kept interest rates unchanged on Wednesday and indicated it does not expect to raise them through 2022. The Fed also said it expects the U.S. economy to contract by 6.5% in 2020 before expanding by 5% in 2021.
“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates,” Fed Chairman Jerome Powell said. “What we’re thinking about is providing support for the economy. We think this is going to take some time.” Stocks in Asia Pacific traded lower on Thursday following the outlook.
Coronavirus developments also remain a key concern for markets. On Wednesday, the cancellation of the hugely popular Coachella and Stagecoach music festivals were announced, as California’s Riverside County Public Health Officer Dr. Cameron Kaiser issued an order, citing fears of worsening Covid-19 spread in the fall.
Several U.S. states that were among the first to reopen from lockdown have reported surges in cases and hospitalizations, including Texas, Florida and Arizona.
Stocks on Wall Street also turned lower on Thursday, with the Dow Jones Industrial Average, Nasdaq and S&P 500 all plunging more than 2% during early deals.
Lufthansa stock fell 7.3% after the German airline announced that up to 26,000 employees could be at risk of job losses. Cinema chain Cineworld plunged 16% to sink to the bottom of the Stoxx 600 while cruise operator Carnival dropped 9.5%.
Unilever was one of only a handful of European stocks in positive territory, gaining 1.5% after the company said it would merge its dual-headed structure to allow for greater M&A flexibility.
Just Eat Takeaway shares reversed early gains to shed 2.7% after the company announced a £5.8 billion ($7.3 billion) deal to buy rival GrubHub.