Europe Markets

European stocks close lower but post best month since October 2015

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Key Points
  • The pan-European Stoxx 600 closed down by over 2%. Still, the index experienced its biggest monthly increase since October 2015.
  • Euro zone GDP contracted by a record 3.8% in the first quarter, compared to the last three months of 2019, official figures showed.

European markets closed lower Thursday but still enjoyed their strongest monthly gains in almost five years.

The pan-European Stoxx 600 closed down by over 2% provisionally with all sectors and most major bourses in the red. Still, the index experienced its biggest increase in the month of April since October 2015.

The European Central Bank (ECB) held rates earlier in the day but said it stands ready to increase stimulus in order to fight the economic fallout from the coronavirus pandemic. The central bank also announced that it had eased lending conditions for banks.

Euro zone GDP contracted by a record 3.8% in the first quarter, compared to the last three months of 2019, official figures showed on Thursday, as lockdowns resulting from the coronavirus pandemic ravage the 19-member bloc's economy.

France entered a technical recession with a contraction of 5.8% in the first three months of the year, the sharpest decline for Europe's second-largest economy since records began in 1949.

Investors in Europe are also reacting to news from the U.S. regarding the use of Gilead Sciences' antiviral drug remdesivir as a potential new treatment for Covid-19 patients.

On Wall Street, stocks dropped as negative economic data outweighed optimism over potential coronavirus treatments.

Gilead Sciences said Wednesday preliminary results of a coronavirus drug trial showed at least 50% of patients treated with a five-day dosage of remdesivir improved and more than half were discharged from the hospital within two weeks.

The Labor Department said another 3.84 million Americans filed for unemployment benefits last week, bringing the six-week total to more than 30 million. U.S. consumer spending also dropped 7.5% in March on a year-over-year basis.

Earnings in focus

Corporate earnings remain a key driver of individual share price action.

Royal Dutch Shell on Thursday morning cut its dividend to shareholders for the first time since World War II, following a plunge in oil prices as the coronavirus pandemic ravages demand. The oil giant reported first-quarter net income attributable to shareholders of $2.9 billion, a 46% decline from the same period last year. Shares pared earlier losses to trade 10% lower.

Carlsberg reported a 7% decline in first-quarter sales and warned that the worst is yet to come, as increased supermarket sales failed to offset the closure of bars and restaurants for the world's third-largest brewer. Carlsberg shares added 2%.

Nokia swung to profit in the first quarter on the back of continuing momentum in 5G deals. The Finnish telecoms provider saw its stock climb almost 2%.

At the top of the European blue chip index, BE Semiconductor shares jumped more than 13%.