Stocks – Europe Pushes Lower Amid Short-Sale Bans; VW, Airbus Halt Output

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By Peter Nurse – European stock markets turned red Tuesday, as evidence of the coronavirus hitting corporate Europe outweighed news of more central bank largesse and promises of action from the G7 and the Eurogroup.

At 05:15 ET (0915 GMT), the U.K.’s index was trading 1.4% lower, 40 was down 1.1%, while the was down 1.4%. The pan-eurozone index, the , dropped 1.0%. 

The mood darkened as regulators in France, Spain and Italy all instituted short-selling bans on selected stocks. The Spanish ban will run for a month, while the French and Italian ones will run only for the day to start with. French Finance Minister Bruno Le Maire said his country’s ban may be extended.

The grim corporate newsflow out of Europe continued Tuesday. German carmaker Volkswagen (DE:) is set to announce a suspension of its production from Saturday due to the coronavirus pandemic, the company’s works council said on Tuesday.

Similarly, French carmaker Renault (PA:) said that it was halting operations in Spain following the declaration of a state of emergency there in light of the coronavirus crisis.

Airbus (PA:) is also stopping production and assembly activities at its plants in France and Spain for the next four days as governments there implement new measures to restrict movements and fight the coronavirus outbreak, the planemaker said on Tuesday.

Earlier Tuesday, the Bank of Japan pumped more than $30 billion into markets with an 84-day dollar funding operation. This move came after the world’s six major central banks took a joint step to provide more cash dollars on Sunday as a rout in financial markets over the past week led to a scramble by banks and companies for dollar liquidity. In addition, the U.S. Federal Reserve cut short-term rates to near zero while pledging hundreds of billions of dollars in asset purchases.

Tuesday’s bounce follows hefty losses in Europe on Monday, while the suffered its biggest one-day plunge ever, falling almost 3,000 points, after President Donald Trump said the worst of the outbreak could last through the summer and that it was not currently under control.

Looking at economic indicators, the numbers for January are due at 0530 AM ET (0930 GMT), but these figures have largely been made outdated by events. However, the economic sentiment release for March, at 0600 AM ET, will be of interest as a gauge of the mood among the country’s investors as the coronavirus pandemic takes hold.

Oil markets have pushed back above the $30 a barrel level Tuesday, helped by the prospect of U.S. and other countries filling strategic storage. That said, it’s debatable how long this will support prices given the major hit to demand and the sharp increase in supply resulting from the collapse of the OPEC+ output restraint pact. 

AT 05:15 AM ET (0915 GMT), futures traded 1.7% higher at $29.50 a barrel and the international benchmark contract up 0.3% at $30.15. 

Additionally, fell 0.2% to $1,483.70/oz, while traded at 1.1116, down 0.6% on the day.


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