Business

Europe Stocks Close Sharply Lower as China Covid Concerns Overshadow Macron Reelection

Benoit Tessier | Reuters
  • The pan-European Stoxx 600 index was down 1.8% by the close with nearly all sectors in negative territory.
  • Over the weekend, China's capital of Beijing warned that Covid has been spreading undetected for about a week.
  • France's Emmanuel Macron comfortably beat rival Marine Le Pen in Sunday's election, securing a second term as president.

LONDON — European stocks closed sharply lower on Monday as concerns over a resurgence of Covid cases in China overshadowed the reelection of French President Emmanuel Macron.

The pan-European Stoxx 600 index closed down by 1.8% provisionally with nearly all sectors in negative territory. Basic resources stocks — with their heavy exposure to China — were the worst performers on the index, with the sector down 5.9%.

The negative trade in Europe comes after Asia-Pacific markets fell sharply on Monday following a sell-off on Wall Street on Friday. Mainland Chinese indexes led losses. The Shenzhen component and Shanghai composite tumbled more than 6% and 5%, respectively.

Asian markets are also being buffeted by concerns over China's Covid wave as the world's second-largest economy struggles to contain its worst outbreak of the virus despite harsh lockdowns in its largest city, Shanghai. Over the weekend, Beijing warned that the virus has been spreading undetected for about a week.

Meanwhile, U.S. stocks fell at the open, continuing an April market sell-off that has pushed the Dow Jones Industrial Average lower for four straight weeks.

Traders on Wall Street are bracing for a stacked week of earnings, including reports from major tech companies such as Amazon and Apple.

Investors in Europe are also digesting the result of the French presidential election on Monday, and monitoring the latest developments in Ukraine.

France's Emmanuel Macron looks set to have comfortably beaten his rival Marine Le Pen in Sunday's election, securing a second term as president on his pro-business and pro-EU agenda.

Official results showed centrist Macron of the La Republique En Marche party gaining 58.5% in the second and final round of voting. Le Pen of the nationalist and far-right National Rally party had almost 42% of the vote.

European investors continue to monitor developments in Ukraine as Russia's invasion of the country entered its third month on Sunday. The conflict that has killed thousands and led to the worst refugee crisis Europe has seen since World War II.

The war will end only if Russian troops fully withdraw from the country, Ukrainian Prime Minister Denys Shmyhal said.

Shares of Dutch health technology company Philips were down more than 11% after the firm reported a steep drop in first-quarter core profit.

At the top of the Stoxx 600, Ubisoft shares surged 9.5% after Bloomberg reported the French video game publisher has attracted takeover interest from private equity firms Blackstone and KKR.

"We don't comment on rumors or speculation," an Ubisoft spokesperson told CNBC.

Ubisoft is "ideally positioned to capitalize on the rapid industry growth and platform opportunities that are emerging right now," the spokesperson added.

In other news, Germany's Ifo Institute reported Monday that sentiment in the German economy has stabilized at a low level.

The ifo Business Climate Index rose to 91.8 points in April, up from 90.8 points in March. This was due primarily to less pessimism in companies' expectations, Ifo said.

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— CNBC's Ryan Browne, Silvia Amaro, Sarah Min and Matt Clinch contributed to this market report.

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