European markets closed lower Wednesday, reversing course as investors closely monitored the spread of the coronavirus.
The pan-European Stoxx 600 closed down 0.7%, having been up more than 2% earlier in the day. Travel and leisure stocks dropped 4% to lead losses while banks and chemicals stocks climbed nearly 1%.
The Bank of England (BOE) on Wednesday morning announced an emergency cut to interest rates in an attempt to limit the economic impact from the new coronavirus.
The central bank lowered its main interest rate from 0.75% to 0.25% and announced a new term-funding scheme to support small and medium-sized businesses, along with measures to help commercial banks lend more.
New U.K. Finance Minister Rishi Sunak then announced fiscal stimulus measures on Wednesday afternoon valued at around £30 billion ($39 billion), including targeted tax cuts and backstopping loans for small businesses. Sunak said the measures were part of a coordinated effort alongside the BOE to insulate the economy.
European stocks had initially bucked the negative trade seen in Asia Pacific on Wednesday with the global coronavirus outbreak still at the forefront of investor concerns. The disease has infected at least 121,000 and more than 4,300 people have died so far, according to the latest figures from the Johns Hopkins University.
Cases in Italy surpassed 10,000 on Wednesday, according to Johns Hopkins University and Italy's civil protection agency, with deaths spiking to 631 as the Italian government implemented strict measures to secure a nationwide lockdown of the country's 60 million inhabitants.
U.S. stock futures fell sharply on Wednesday, pointing to another volatile session on Wall Street following a massive rally. That came amid hopes that the U.S. government will move forward with fiscal stimulus to curb an economic slowdown from the coronavirus spread.
A White House official told CNBC on Tuesday that President Donald Trump pitched a 0% payroll tax rate for the rest of 2020, but the timing of such policies being implemented remains uncertain.
Earnings were a key driver of individual price action on Wednesday.
Adidas warned before the opening bell of a 1 billion euro ($1.13 billion) sales drop in greater China for the first quarter. The German sportswear brand reported fourth-quarter operating profit of 245 million euros and sales of 5.84 billion euros, missing analyst expectations on both counts. The company's shares fell 9.1% by mid-afternoon.
Security contractor G4S plunged 29% to the bottom of the Stoxx 600 after falling to an annual loss due to a $375 million charge relating to its U.K. cash business, while Norwegian oil and gas company Aker BP dropped 9.2% after awarding Eidesvik Offshore ASA a contract for its platform oil supply vessel Viking Lady.
At the top of the European benchmark, K+S shares climbed 10.2% during afternoon trade despite the German minerals miner reporting lower-than-expected fourth-quarter core profit and revising down its 2020 guidance.
Knorr Bremse shares climbed 8.5% after the braking systems manufacturer warned of a 60 million euro coronavirus hit but reported strong revenue and margin growth.