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European stocks traded back and forth across the flat line on Friday, as investors attempted to regroup after the worst session since March, which was driven by losses on Wall Street and concerns over rising coronavirus outbreaks in the U.S.
The Stoxx Europe 600 index SXXP, -0.12% was last flat at 352.74, after falling 4% on Thursday for its biggest one-day percentage decline since March 23. A gain Friday would break a string of losses that have stretched for four straight sessions.
Concerns that the market has risen too far, too fast has been a growing concern among investors, and Thursday’s action may intensify the debate over whether a correction is looming. The Stoxx 600 remains 18% above a March 18 closing low of 279.66. The German DAX DAX, -0.11% was flat and the French CAC 40 index PX1, +0.10% gained 0.2%.
The FTSE 100 UKX, -0.35% fell 0.4% after data revealed gross domestic product collapsed by a record 20.4% in April, amid the country’s pandemic lockdown and health crisis.
Wall Street hinted at a potential rebound. Dow futures YM00, +1.40% jumped over 200 points after Thursday’s crushing loss of 1,861.82 points, or 6.9% and the biggest one-day fall since mid March. Bullish investors were unsettled by a grim economic outlook from the Federal Reserve and rising coronavirus cases in 20 states, coming just as the U.S. economy is trying to get back on its feet.
“Yesterday’s selloff was so sudden and large that it could trigger a widening unease about the quality of the recent market rise, given the enthusiastic participation of novice traders on the way up and signs of speculative froth in low quality equities names,” said Saxo Bank’s chief economist and CIO, Steen Jakobsen, in a note to clients.
“This is not a prediction, but a warning of heightened risk that only goes away if volatility quickly drops back lower,” Jakobsen added.
Among stocks on the move, shares of Games Workshop Group Inc. GAW, +9.78% rose nearly 8% after the U.K. videogame publisher and developer said “recovery since reopening has been better than expected.”
Shares of Pearson PLC PSON, +7.13% rose 5% after a regulatory filing on Thursday revealed activist investment firm Cevian Capital has built a stake in the U.K.-based education company.
Informa PLC INF, +7.55% rose 6% after the U.K. events and academic-publishing group said its outlook was uncertain due to the pandemic, but it had identified cost savings of at least GBP400 million. The company also said it expects major events in mainland China to return.
