European stocks plunged on Friday, thanks to increasing cases of coronavirus in several countries and new restrictions on coronavirus on trips between France and Britain.
Concerns about worse-than-expected factory and retail data in China and the ongoing deadlock over new fiscal stimulus in the US also weighed on sentiment.
The British FTSE 100 (^ FTSE) was down 2.3% in morning trading, France’s CAC 40 (^ FCHI) 2.2% and Germany’s DAX (^ GDAXI) 1.3% lower.
The pan-European Stoxx 600 (^ STOXX) fell 0.6%, with travel stocks on the index down 3.3%. TUI (TUI.L), EasyJet (EZJ.L), owner of British Airways IAG (IAG.L) and Ryanair (RYA.L) all fell more than 4%.
It came as Britain announced a 14-day quarantine to travelers arriving from France late on Thursday, after French authorities reported more than 2,500 new daily cases for a second day in a row. It marked a return to infection rates last seen in mid-April at lockdown.
“Apart from the direct damage this will do to the school holidays and the whole summer season, the quarantine decision also underlines the inherent risk you are taking when booking a holiday abroad at this time. , which will do nothing for consumer confidence, “said Neil Wilson, chief market analyst at Markets.com.
Other European states have seen upticks in infections since lockdowns were required. Spain reported its worst new daily cases since its lockdown ended seven weeks ago on Thursday.
New cases of coronavirus have been reported daily in the EU, EEA and UK since the end of February, with effect from 13 August. Chart: European Center for Disease Prevention and Control
Earlier this week, Norway imposed quarantine rules on new arrivals after their cases reached their highest level since April last week. Germany has imposed mandatory tests for travelers from areas classified as high risk, after its cases for the first time since May last week exceeded 1,000-a-day.
Meanwhile, the Netherlands has seen 55% of cases this week, with Greece reporting its highest daily number since the outbreak on Wednesday.
Investors were also looking for new economic data. Industrial production was less strong than expected and retail sales saw a surprise drop in China in figures released last night.
But Michael Hewson, chief market analyst at CMC Markets UK, noted that European markets remained on course for a second week of gains despite virus concerns and stock declines on Thursday and early trading on Friday.
China’s composite index of Shanghai (000001.SS) was still up 1.2% and the Japanese Nikkei (^ N225) was up 1.2% overnight, but the Hong Kong Hang Seng (^ HSI) was unchanged.
Shares looked set for a muted open later on Friday in the US, after investors on Thursday pushed the political impasse over incentives against lower-than-expected unemployment claims.
S&P 500 futures (ES = F) were flat, Dow Jones futures (YM = F) were down 0.1% and Nasdaq futures (NQ = F) were up 0.1%.
