European financial centers continue to fall

  •   16/03/2020 - 17h34
  •   HARMANT Adeline

It is again in the red that the main European places open in this first session of the week. Indeed and because of the still uncontrollable expansion of the coronavirus epidemic and the increasingly well-founded fears of a global economic recession, the measures put in place by the major central banks were not enough to reassure the market.

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European financial centers continue to fall
Image copyright: Rock Cohen - Flickr

Point and explanations about European stock exchanges :

Thus, the CAC 40 lost 8.58% this morning at 3 764.52 points, a level that it had not reached since the summer of 2013. The FTSE 100 dropped 7.14% and the DAX 30 lost 7.61%. The Eurostoxx 50 index is down 7.61%.

This continued market decline comes at a time when the number of new cases and deaths related to coronavirus is increasing worldwide, forcing governments to reduce economic activity to a minimum in order to curb its expansion.

Indeed, it should be noted that China experienced its biggest contraction in 30 years in the first 2 months of the year, with a decline in retail sales for the very first time in its history.

On the US market, Goldman Sachs has lowered its growth forecast for the first and second quarters and is targeting a 5% contraction in GDP for the months of April to June.

In response to this unprecedented situation, the FED announced a 100 basis point rate cut, as well as $700 billion in purchases of securities on the markets, a relaxation of prudential rules to boost bank lending and a concerned initiative with 5 other major central banks to ensure the availability of dollar liquidity.

The BoJ also announced measures to support the economy such as purchases of additional assets like index equity funds or ETFs.

The recession triggered by the coronavirus is thus very real and could be important although brief. This slowdown will be temporary because it is not linked to deep problems and imbalances in the economy but to a shock that has paralysed the world economy and could not be anticipated.


The European values most affected this morning :

In terms of values, we note that almost all European sectors are affected by this risk aversion, with the air transport and tourism sectors in particular plunging by 14.63% this morning.

As far as cyclical sectors are concerned, we note a fall in the European Stoxx gas index of 6.53%, a fall in raw materials of around 7.8%, a fall in the construction sector of 10.61% and a fall in the automobile sector of around 10.64%.

The most impressive declines are those of the Airbus group, which lost 17.15% this morning at the opening of the Paris stock exchange, as well as Volkswagen, which fell by 11.26% and Kering, which lost 9.79%.

Elsewhere, travel operator TUI lost 28.09% and British airline EasyJet fell 28.09%.