Europe midday: Looming France, Germany lockdowns send shares lower

European shares were firmly in the red at lunchtime on Wednesday as reports of impending coronavirus lockdowns in France and Germany dampened sentiment.

The pan-European Stoxx 600 index was down 2%, with the German DAX sliding 3.32% and France’s CAC 40 2.98%.

French President Emmanuel Macron was scheduled to make a national address later on Wednesday with reports that he would lock down the country for a month.

In Germany, Chancellor Angela Merkel was reportedly proposing the closure of bars and restaurants for one month.

The UK’s the daily death total hit its worst levels since May, with calls increasing for the government to shift its current uncoordinated and much-criticised regional approach and impose a nationwide “circuit breaker” lockdown. The FTSE 100 was down 1.77%.

US futures also indicated more losses with the Dow set to open more than 460 points lower. Investors have all but given up hope of a pre-election stimulus package with the vote just a week away.

“As has been the case since March, investors’ concerns aren’t over the number of daily cases and deaths per se, but the severity of the restrictions that will greet each new leap and the crushing impact said measures will have on the global economy,” said Connor Campbell at Spreadex.

“Bags packed and gas tank full, investors fled the markets with the speed and panic of a family trying to escape a disaster scene.”

IG analyst Joshua Mahony said a second bout of nationwide lockdowns raised the chance of a double-dip recession.

"While regional action helped alleviate much of the negative market impact in recent months, the sharp ascent in Covid cases throughout Europe clearly calls for more dramatic measures. With the DAX slumping into a fresh four-month low, we look to be on our way to finally see the second major collapse in equity prices since the March bottom," he said.

In equity news, travel and leisure stocks were under pressure, with British Airways owner IAG, InterContinental Hotels, Premier Inn owner Whitbread, Upper Crust owner SSP, pub chain Wetherspoons and travel company TUI all in the red.

Shares in French consulting and software development company Sopra Steria slumped 15% to top the losers board after reporting lower third quarter revenues due to weak business activity in the aeronautics sector.

Clothing retailer Next nudged stood out as a gainer as the company lifted full-year profit guidance after a better-than-expected rise in third quarter sales. It forecast a pre-tax profit of £365m, up £65m from a central scenario given in September.

Deutsche Bank shares fell, despite the company posting better-than-expected results driven by a strong performance for its investment bank.

Shares in sports goods manufacturer Puma fell after the retailer reported higher third-quarter profits and sales.

French car maker Peugeot fell 4% as the company posted a fall in third-quarter revenue fall and said it expected the European car market to drop 25% in 2020.

Shares in aircraft engine maker Rolls-Royce soared more than 24% after shareholders backed the British engineer's £2bn right issue, throwing it a lifeline as its tries to survive the Covid crisis.

The emergency fundraising will allow Rolls to unlock a wider support package worth £5billion in total. This includes £2bn of bonds that will be sold on the debt market and another £1bn through refinancing with its banks.

Delivery Hero and Ocado shares rose on the prospect of lockdowns and more people ordering takeaway food and groceries online.