European equities plunged the most since 2016, putting them on course to enter a bear market, as a price war in oil dealt a new blow to a global economy already grappling with the coronavirus.
The Stoxx Europe 600 Index plunged 6.6% as of 8:25 a.m. in London, even though some heavyweight members had not yet opened, taking its slide since a Feb. 19 record to 21%. Energy shares plummeted after the dramatic collapse of talks between OPEC and Russia prompted Saudi Arabia to launch a price war.
A sharp sell-off in European stocks since last month’s peak, prompted by the escalating virus outbreak outside of China, is sending several of the region’s sector indexes and market benchmarks into bear territory.
The benchmark FTSE MIB Index in Italy, which is now the country most affected by the coronavirus after China, is now down 20% from its high. The U.K.’s FTSE 100 Index and Spain’s IBEX 35 were also poised to enter bear territory.
“So far, the market has largely ignored any positive news, which fits the panicky mood,” said David Kunz, managing director at BX Swiss in Zurich. “The market is clearly fearing a possible recession now.”
A slew of profit and sales warnings combined with reports of more virus cases last week put an end to a brief spell of market optimism over policy measures to combat the outbreak’s impact.
© 2020 Bloomberg L.P.