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Europe open: Stocks fall back after rally as EU leaders debate coronavirus bonds

By Alexander Bueso

Date: Friday 27 Mar 2020

Europe open: Stocks fall back after rally as EU leaders debate coronavirus bonds

(Sharecast News) - Stocks on the Continent are moving lower amid a falling out between European Union leaders over whether to issue common debt in order to raise funds to see through the Covid-19 pandemic.
Also weighing on sentiment was news that the number of coronavirus infections in the US, at 82,404, had surpassed China, even as Spain recorded the highest single day in fatalities thus far.

Despite that, analysts at Bank of America believed the current bear market rally for stocks in the States had further to run, thanks to the prompt action taken by economic authorities, with the key now whether a repeat of something akin to the 2008 crisis, when the bankruptcy of Lehman Brothers sent the global financial system into meltdown, could be avoided.

"Big difference in this crash is policy panic before not after credit event; if Fed bazooka short-circuits a systemic bankruptcy combo of max bearish positioning + max policy stimulus = big rally in credit & stock markets," they said in a research report sent to clients.

As of 1030 GMT, the pan-European Stoxx 600 was losing 2.37% to trade at 313.75, while the German Dax was trading down 2.19% at 9,782.02, alongside a 2.18% fall on the FTSE Mibtel to 16,991.69.

"While US markets have seen gains in excess of 15% in the past three days, markets in Europe have lagged behind a touch, hindered to some extent by the fragmented response from various Eurozone governments to the crisis. Europe hasn't been helped by signs that the outbreak is Spain is getting worse, while the Italian situation isn't slowing down anywhere near as quickly as people originally thought," chipped in Michael Hewson at CMC Markets UK.

In the background, multiple media outlets were asking why the situation in Italy and Spain had gotten so out of hand, with some observers highlighting the lax containment measures first put in place in Italy.

Against that backdrop, on Friday morning ISTAT reported massive drops in Italian consumer and business confidence levels.

An index tracking the former fell from 110.9 points to 101.0 - sending it back down to levels last seen in June 2013 - and another linked to business confidence dropped from 97.8 to 81.7, its January 2015 lows.


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