European stocks down and safe-haven up

  •   27/01/2020 - 17h46
  •   Adeline HARMANT

In this first session of the week, most European stock markets are losing points as a result of investor fears and risk aversion in favour of safe havens and the coronavirus epidemic in China.  

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European stocks down and safe-haven up

European financial markets fell sharply on Monday:

Thus, the CAC 40 lost 1.36% to 5,940.26 points at the opening of the session, while the DAX 30 dropped 1.33% and the FTSE lost 1.49%. The Eurostoxx 50 is down 1.15%.

This significant drop is explained by the increased toll of the coronavirus epidemic in China, which now totals 81 deaths and where the government has extended the New Year holiday in an effort to curb the spread of the disease. All international health authorities are currently engaged in a race against time following the appearance of various cases outside Chinese territory.

It should be remembered that the markets were mainly in the green and at high levels before the emergence of the virus and even reached, for some indices, real records.


European actions to watch out for in the coming hours :

As for the European equity market, during the first trades of the week, some stocks suffered more than others due to their large exposure to the Chinese market. These include values in the luxury sector such as LVMH, which lost 2.95%, Hermès, which sold 2.19%, Kering, which lost 2.77%, and Air France in the air transport sector, which declined by 4.11%.

It should also be noted that the Accor group recorded the largest decline in the CAC with a loss of 3.93% and that the Arcelormittal group fell by 3.7%.

Generally speaking and if all sectors of activity are impacted by this crisis, the sectors most affected are those of basic resources with a drop of 3.14% and the transport and leisure sector with a loss of 2.95%.


Impact of the crisis on other markets :

On the forex market, the appreciation of the yen is also being felt as the currency plays its role as a safe haven with a 0.5% gain against the greenback and reaching a two and a half week peak. The dollar weakened against a basket of benchmark currencies, including the euro, which rose slightly.

The retreat towards safe havens is also being used for government bonds with the 10-year Treasuries, whose yield has fallen by almost three basis points. In Europe, the German 10-year Bund lost 1.5 basis points while the French 10-year OAT hit a three-month low at the beginning of the session.