European stock markets slumped Thursday, as the gloomy assessment of the economic outlook by the U.S. Federal Reserve prompted investors to take profits after the sector’s strong run.
At 4:05 AM ET (0805 GMT), the DAX in Germany traded 2.8% lower, France's CAC 40 fell 3%, the U.K.'s FTSE index was down 2.6%, while the broad-based Stoxx Europe 600 index dropped 2.5%.
European equities have undergone a hefty rally from the depths of the coronavirus crisis, with the Stoxx Europe 600 index posting gains of over 30% from its March lows.
However, the downbeat assessment of the economic outlook of the world’s largest economy by the Federal Reserve, its first since the coronavirus outbreak, has prompted broad profit taking.
“Overall, the Fed thinks the road to recovery has begun, but it is a long run. And it is not V-shaped one,” said analysts at Nordea, in a research note to clients.
Many of the decliners Thursday are those stocks which were very hard hit at the start of the coronavirus-inspired declines, including airline Deutsche Lufthansa (DE:LHAG), travel agent Tui (DE:TUIGn) and retailer Hugo Boss (DE:BOSSn).
Elsewhere, Just Eat Takeaway (AS:TKWY) rose 1.3% after announcing its $7.3 billion deal to buy U.S. meal-delivery service GrubHub (NYSE:GRUB). Just Eat had dropped 13% on Wednesday as The Wall Street Journal had reported the deal was close.

Additionally, eye will be on the Eurogroup meeting later Thursday, where the region’s finance ministers are expected to discuss the EU recovery fund.
“Given the differences between the EU commission and e.g. the Netherlands and Austria, the proposal for the recovery fund needs some work before it can be passed in the various parliaments,” said Danske Bank, in a research note.
Oil prices slumped Thursday, weighed by the Fed’s grim assessment of the economic outlook as well as increased fears of a supply glut.
U.S. crude stockpiles rose by 5.72 million barrels last week to 538.1 million barrels, the Energy Information Administration forecast late Wednesday, against expectations of a 1.738 million-barrel draw.
EIA’s call followed the American Petroleum Institute prediction of a whopping 8.4 million-barrel build on Tuesday, increasing fears of an oversupply.
At 4:05 AM ET, WTI Futures traded 3.8% lower at $38.11 a barrel. The international benchmark Brent contract fell 3.4% to $40.33.
Elsewhere, gold futures rose 1.3% to $1,743.75/oz, while EUR/USD traded at 1.1370, largely unchanged.