(BFM Bourse) – The Paris Bourse is accelerating its fall and is now losing nearly 11% after announcements from the ECB, the use of the term “pandemic” by WHO to describe the health crisis and the new restrictive measures announced by Donald Trump.
Capitulation in progress on the Paris market, which lost 11.21% at 4,093 points around 2:45 p.m., further deepening its losses compared to midday (-5% at 12 p.m.) in the wake of ECB announcements. The European monetary institution has announced new measures to support the credit market, but it has left its key rates unchanged as the multiplication of coronavirus cases and the adoption of increasingly draconian measures to stem the epidemic of Covid-19 fuel panic in the markets.
The flagship index of the Paris market therefore seems on track to record the worst daily performance since its creation in 1988, a record previously held by Monday October 6, 2008 (-9.04%), when the world markets had been panicked after the Lehman Brothers bankruptcy.
After opening down 2.37% -performance in trompe-l’oeil since at this moment more than half of the values being reserved for the fall as during this last “black Monday” – the barometer of the Parisian market n ‘really rated that more than 10 minutes after the theoretical opening of trade.
Among the most sanctioned stocks at 2:20 p.m., Europcar (-20.1%) and ADP (-11%) suffer particularly, while the prospect of privatization has soared for the moment) are suffering from the tourism crisis in prospect, especially since Donald Trump announced Wednesday the suspension of travel to the United States from Europe.
On the SRD, we can also take the dives of Maisons du Monde (-12.4%), Soitec (-12.3%), Europacorp (-12.3%), Schlumberger, Safran and Natixis (-12% each) ).
Within the CAC 40, Airbus (-13.5%), AccorHotels (-12.7%), Safran (-12.5%), Sodexo (-11.1%), Saint-Gobain (-11.1 %) and Vinci (-11.1%) recorded the strongest falls, while Renault, Axa, Legrand, ArcelorMittal and Veolia also showed double-digit declines. None of the 40 largest stocks on the Parisian market has managed to progress. Worse, none of the 40 CAC values ”limit” the breakage, the most “slight” decline being for Hermès (-5%) at this stage. On all the markets, very rare stocks “outperform” like Novacyt, the laboratory which put on the European market the first test of the coronavirus Covid-19. The title which has seen its course multiplied by more than 7 since the beginning of the crisis announced that it would increase its production capacities tenfold to meet demand, and is therefore progressing clearly.
Covid-19 confirms “black swan” status
By gradually shutting down a large part of China, the world’s factory, in early 2019, the Covid-19 coronavirus pneumonia epidemic cut the momentum of the main global financial markets. What will happen when the planet is now entering the pandemic phase? The possible scenarios for this question obviously do not lead investors to optimism while governments resolve, after having been too late in the eyes of WHO to put in place simple precautionary measures, to take drastic decisions to the image of Donald Trump’s ban on all travel between Europe and the United States for 30 days from Friday. Unheard of since the Second World War and the entry into the war of the USA against Nazi Germany …
New York record 11-year bull market ends
The reaction of the American president, although accompanied by a new set of economic support measures, did nothing to help Wall Street, where the Dow Jones yielded 5.86% to enter in turn into “bear market” , in good French in the bear market phase (which means that an index has lost at least 20% of its value compared to its last peak). Goldman Sachs’ chief US equity analyst David Kostin delivered the funeral oration of the longest “bull market” on the American stock market, which had never experienced such a major correction in eleven years, unheard of in history.
In Asia this morning, the Nikkei abandoned 4.4%, the Indian stock market 7%, while Shanghai limits its decline around -2%, while paradoxically the course of the epidemic in the country which seems to be there. he origin begins to change – at the cost of the sacrifices that we know in terms of the mobility of individuals and therefore of activity.
New ECB package of measures expected, no miracle to wait
As for the European markets, in view of the forward contracts more than an hour before the opening, a drop of around 260 points on the CAC 40 is not excluded, i.e. a theoretical opening 5% below the eve, for a sixth consecutive session in the red anyway.
In the afternoon, operators will carefully follow the intervention of the President of the European Central Bank Christine Lagarde, who will draw a series of measures to support the most affected sectors. However, the range of tools at its disposal is shrinking in a context of already negative rates and it seems unlikely that the intervention of the ECB will make it possible to reverse the course of the session.
“While it is difficult today to draw any plans for the comet since we have absolutely no knowledge of the extent and the economic ravages of the coronavirus, it can however be affirmed that without concerted actions by central banks and governments, effects on a faltering economy will not be of great magnitude … “notes John Plassard, at Mirabaud Securities.
Oil continues to fall
The prices of the two world references in crude oil fell again Thursday morning after the announcement by US President Donald Trump of a suspension for 30 days of all travel between Europe and the United States. Shortly before 2:30 p.m., a barrel of Brent drops another 7.40% to 33.14 dollars, when the Texan “light sweet crude” yields 7.25% to 30.59 dollars. Black gold prices remain under pressure in the face of an intensifying price war, particularly between Saudi Arabia and Russia.
Guillaume Bayre – © 2020 BFM Bourse
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