European stocks sold off the most since their March collapse.
European stocks sold off the most since their March collapse, as investors are concerned that lockdowns seeking to control the coronavirus’ spread could force the Eurozone economy into a double-dip recession. The pan- European STOXX Europe 600 Index tumbled 5.56% lower, with major indexes also posting losses. Germany’s DAX Index fell 8.61%, France’s CAC-40 Index slid 6.42%, and Italy’s FTSE MIB Index lost 6.96%. The UK’s FTSE 100 Index also posted solid losses of 4.83%. As the Q3 earnings season reaches its halfway mark, according to JPMorgan Chase & Co. in Europe 70% of Stoxx 600 companies have exceeded EPS estimates. European stocks have massively underperformed US and China related to the dynamics of the virus. European indices have recorded a cumulative drawdown of nearly 10% since October 12, against a -6.5% for the S&P 500, -4% for the Shanghai Composite and – 2.5% for Nikkei.
U.S. stocks posted their worst weekly declines since March, amid a resurgence in Covid cases and election uncertainty. Most major benchmarks fell into correction territory on Friday morning, or down over 10% from recent highs. The declines were broad-based, but technology and consumer discretionary shares fell the most within the S&P 500. Utilities, materials, and real estate sectors held up best, while the Cboe Volatility Index spiked to 41, reaching its highest level since early June.
On the corporate front, by October 28, half the S&P 500’s constituents had reported. At this stage, earnings have beaten lowered estimates by +18% in aggregate, with 83% of companies beating consensus forecasts. Some sectors fared worse than others. The U.S. airline industry was badly impacted in Q3, posting aggregate losses above $11 billion, and revenues near one-fourth of year-ago levels. Some of the most notable earnings reports came from tech and internet giants Apple, Amazon, Alphabet and Facebook. Each beat consensus earnings and revenue estimates, but all except Alphabet fell.
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