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European stocks broke a two-session winning streak on Friday, after a European Union summit failed to agree on a much-needed stimulus package and amid doubts over a promising coronavirus treatment from Gilead.
Earnings news lifted shares of Nestlé SA, while banks were under pressure.
The Stoxx Europe 600 index SXXP, -1.22% fell 1.1% after gaining 0.9% on Thursday, but is set for a more than 1% loss for the week, after two straight weekly gains. The index is up around 19.16% from a 52-week low of 279.66 on March 18, 2020. The German DAX DAX, -1.68% dropped 1.6%, while the French CAC 40 PX1, -1.53% and the FTSE 100 index UKX, -1.48% fell just over 1% each.
European Union leaders signed off an already-agreed €500 billion ($542.15 billion) coronavirus response, but failed to make headway on a longer-term recovery plan that could reach a trillion dollars. That’s as European Central Bank President Christine Lagarde warned that region’s economy could contract up to 15% this year in a worst-case scenario, according to a report in The Wall Street Journal.
“For the pessimist, it kicked the can a little bit down the road, asking the EC to work on details of a European Recovery plan to be presented at the next Eurogroup in a few weeks. For the optimist, it put trillions on the table without conditionality, and said there would be ‘a sound balance between loans and grants’. For the cynical, it was vague with details,” said Agnès Belaisch, chief European strategist at Barings in a note to clients.
Lagarde’s warning came amid a slew of downbeat data. The German Ifo survey of business confidence slid to 74.3 in April from 85.9 points in March, the biggest drop on record. “The corona crisis hits the German economy with full force,” said Ifo.
That comes on the heels of downbeat European purchasing and services managers surveys released Thursday.
U.K. data released Friday showed retail sales slid 5.8% in the 12 months ending March, the worst on record.
U.S. stock futures indicated a subdued start for Wall Street , with Thursday’s rally squashed by a report suggesting that Gilead’s GILD, -4.34% hoped-for coronavirus treatment remdesivir wasn’t effective in early China trials. The company countered that the results were not conclusive, with its own clinical trial due for release at the end of the month.
Banks led the way south for Europe stocks, with HSBC Holdings PLC HSBA, -1.31% dropping 1% and Spain’s Banco Santander SA SAN, +1.46% SAN, -3.67% and France’s BNP Paribas SA BNP, -3.17% down over 3% each.
Shares of Burberry PLC BRBY, -2.80% fell over 4%. The company said Friday board directors and senior management would take voluntary pay cuts to help the company preserve liquidity amid the coronavirus crisis.
Shares of heavily-weighed Nestlé SA NSRGY, -2.92% NESN, +2.15% rose over 1%, after the Swiss-based food giant’s first-quarter organic sales growth of 4.3% came in ahead of consensus, and the company stuck to 2020 guidance.
“While pantryloading will have helped (and won’t repeat) the breadth and depth of progress is impressive, with the implication that NESN are having a much better war than ULVR, thus far,” said Martin Deboo and a team of analyst at Jefferies.
Sanofi SA shares SNY, +0.37% SAN, -1.24% slipped 0.7%. The French pharmaceutical giant reported higher first-quarter sales, but that was largely due to pandemic-driven stockpiling of prescription drugs, strong demand for flu vaccination and over-the-counter cough and cold drugs due to the pandemic.
