European stocks slip after record week amid weak data and coronavirus worries

AFP via Getty Images
A Deutsche Bahn Inter-City Express train passes containers from shipping giants Maersk and Hapag-Lloyd piled up in the freight yard of Berlin’s Behala west harbour on February 5, 2020.

European stocks were headed for the best weekly return in nearly two years, but fell on Friday as coronavirus concerns simmered and German industrial production slumped. Investors were also waiting for important U.S. jobs data.

The Stoxx Europe 600 index SXXP, -0.39% slipped 0.3% to 424.12, a day after reaching a record close of 425.49. The index is also poised for a near 3.3% gain this week, which would be the best weekly return since March 2018, according to FactSet data.

The FTSE 100 index UKX, -0.67% dropped 0.5% to 7,468.13. The German DAX 30 index DAX, -0.66% fell 0.4%, while the French CAC 40 index PX1, -0.29% was down 0.2% after downbeat data from both countries on Friday. German industrial production came in far worse than expected, with a 3.5% drop in December against expectations for a 0.1% rise.

“Manufacturing was weak, but the misery was aggravated by a 8.7% month-to-month crash in construction, which is wild, even for these data,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, in a note to clients.

French industrial production also fell further than expected in December.

U.S. stock futures slipped ahead of looming jobs data—economists surveyed by MarketWatch expect 164,000 jobs were added in January. The data could be a test for Wall Street equities, which have also hit fresh records this week as investors have seized on positive trade news and shed some concerns over the coronavirus outbreak.

However, the death of a Chinese doctor who sounded the alarm over the epidemic in China has driven home the fact that the country is still grappling to get the outbreak under control. The number of infected globally rose to 31,000 and the death toll in China has reached 636. That is as Japan reported 41 new cases of the virus on a quarantined cruise ship.

Investors were anxious ahead of a weekend that could bring worsening news on the spread of the virus.

That is as corporations continued to discuss potential fallout. Shares of luxury group Burberry BRBY, -1.19% fell 2.7% after Chief Executive Marco Gobbetti said the coronavirus outbreak was “having a material negative effect on luxury demand,” and that it expected spending for Chinese tourists in Europe and other tourist destinations to worsen over coming weeks due to travel restrictions.

Shares of Credit Suisse CSGN, -2.46%CS, +0.85% tumbled 4% after the Swiss bank said it had accepted the resignation of Chief Executive Tidjane Thiam in the wake of a spying scandal. He will be replaced by Thomas Gottstein, who has been heading up the lender’s Swiss unit.

On the upside, shares of L’Oréal OR, +1.16% rose 1.8% after the cosmetics giant reported stronger-than-expected fourth quarter sales. L’Oréal said the coronavirus will have a “temporary impact” in the China and Asia region, but based on similar outbreaks in the past, such as severe acute respiratory syndrome, it expects consumption to resume stronger than before.

“Therefore, at this stage, and assuming that this epidemic follows a similar pattern, we are confident in our capacity this year again to outperform the beauty market and achieve another year of growth in both sales and profits,” said the company.