Sep 21, 2020

European Markets at Close Report: European stocks close down over 3% as bank allegations, coronavirus roil markets


Elliot Smith, Holly Ellyatt

European stocks closed sharply lower Monday as allegations surrounding bank dealings and rising coronavirus infections weighed on market sentiment around the world.

The pan-European Stoxx 600 closed down by over 3.2% provisionally, with banks plunging 5.7% and travel stocks tumbling 5.2% to lead losses as all sectors and major bourses slid into negative territory.

As well as the latest coronavirus developments, investors in Europe kept a close eye on bank shares Monday following allegations this weekend. In Asia, Hong Kong-listed shares of Standard Chartered and HSBC tumbled on Monday following reports that they allegedly moved large sums of suspicious funds. By Monday afternoon, London-listed shares of Standard Chartered tumbled 5.2% and HSBC fell 4.9%. Earlier in the trading day, shares of HSBC had fallen to a more than 25-year low, according to FactSet.

Several global lenders were identified in media reports as having allegedly moved suspicious funds over a period of nearly two decades. The reports cited confidential documents submitted by banks to the U.S. government. HSBC said in a statement to CNBC, “We do not comment on suspicious activity reporting.” 

Standard Chartered, meanwhile, said in a statement: “The reality is that there will always be attempts to launder money and evade sanctions” and that it took its “responsibility to fight financial crime extremely seriously.”

UK warning

In the U.K., the government’s top scientists warned the country could expect to see almost 50,000 new cases per day in mid-October if no action is taken. Meanwhile on Wall Street, shares fell sharply as fears about the worsening coronavirus situation and uncertainty over further fiscal stimulus rattled traders.

In terms of individual share price action, Germany’s United Internet plunged more than 24% by the afternoon after lowering its outlook, while Network International dropped 11% to extend a recent slide.

Rolls-Royce tumbled 10.8% after announcing plans to raise £2.5 billion ($3.24 billion) to strengthen its finances. British Airways parent IAG continued to fall, dropping another 12.1% to lead a broad decline for the travel sector amid rising coronavirus cases.

At the top of the European blue-chip index, German meal kit delivery company HelloFresh gained 6.7% amid speculation of further lockdown measures in Europe.

— staff contributed to this market report.

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