European Shares Give Back Gains After Dire PMI Reports

European shares are reversing earlier gains on Thursday after economic data out of the Euro Zone showed record deterioration due to the coronavirus crisis. Shares were higher on the opening after the release of promising corporate earnings and a rebound in crude oil prices. Also helping to underpin the markets were better performances in Asia and the U.S. futures markets.

At 09:31 GMT, the U.K.’s FTSE 100 Index is trading 5769.66, down 0.97 or -0.02%. Germany’s DAX is at 10387.19, down 27.84 or -0.27% and France’s CAC 40 Index is trading 4429.19, up 17.39 or +0.39%.

Earnings Key Driver of Early Market Sentiment

Credit Suisse posted a 75% jump in first-quarter net profit compared to the same period last year, with net income of 1.31 billion Swiss Francs. The Swiss lender also set aside 568 million Swiss Francs for potential credit losses due to the coronavirus pandemic.

Swiss travel retailer Dufry jumped 9.4% to lead the Stoxx 600 after outlining plans to strengthen its capital structure. However, British financial services company Legal & General tumbled 6.9% after Deutsche Bank cut its price target.

French carmaker Renault reported a 19.2% fall in first-quarter revenue but said it was too early to quantify the impact that the coronavirus crisis would have on earnings this year. Renault shares climbed 1.7%.

Euro Zone Business Activity Ground to a Halt in April: PMI

Economic activity in the Euro Zone all but ground to a halt this month as the new coronavirus sweeping across the world forced governments to impose lockdowns and firms to down tools and shut their businesses, a survey showed on Thursday, Reuters reported.

HIS Markit’s Flash Composite Purchasing Managers’ Index (PMI), seen as a good gauge of economic health, sank to 13.5, by far its lowest reading since the survey began in mid-1998 and considerably below all forecasts in a Reuters poll. Even the most pessimistic contributor to the poll had predicted a reading of 18.0.

Dismal Outlook for Euro Zone Economy

“April saw unprecedented damage to the Euro Zone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,” said Chris Williamson, chief business economist at HIS Markit.

“The ferocity of the slump has also surpassed that thought imaginable by most economists.’

“In the face of such a prolonged slump in demand, job losses could intensify from the current record pace and new fears will be raised as to the economic cost of containing the virus,” Williamson said.