Coronavirus: after optimism, European stock markets in the red

After two days of rebound, the European stock exchanges seem to have exhausted their stock of optimism in the face of the rise in the wave of contaminations at Covid-19 in the United States and its economic consequences which, in turn, risk hitting the Old Continent .

This Thursday, the European financial centers are indeed moving in the red: at the end of the morning, the FTSE in London lost 2% while the Frankfurt Stock Exchange dropped 2.3%. The Paris Stock Exchange was also down 1.8%, as was the Euro Stoxx 50, at -1.6%.

The future Americans, despite the rebound of the previous day, also evoke a decline. It must be said that the signals about the arrival of the epidemic in the United States are now clear: the country has just passed the symbolic bar of a thousand victims. As in the rest of the world, the epidemic risks putting a serious brake on the American economy. And this, despite the outrageous shouts of Donald Trump, who calls not to paralyze the country. Investors should also have their eyes riveted this Thursday on the figures for weekly jobless claims, well set to explode. Problem: according to Bruno Le Maire, the French Minister of Economy and Finance, the economic slowdown will, in turn, worsen the crisis in Europe.

Startle

However, not everything is black: tonight, the European Central Bank published the legal text of its spectacular plan to combat the economic consequences of the coronavirus in the euro zone of 750 billion euros. The institution had then said that its action would have “no limit”. This translates, in this text, by the removal – in the case of asset purchases of the anti-coronavirus program PEPP only – from the 33% lock that it had always imposed in the repurchase of debt. “In short, the decision removes virtually all constraints on asset purchases, thereby strengthening the credibility of the ECB’s commitment,” said Frédérik Ducrozet, economist for the Swiss bank Pictet.

On Wednesday, the world’s stock markets experienced a second consecutive day of rebound. Far from being a trend, this increase resembles the bursts that the markets experienced during their descent into hell between 2008 and 2009. However, over the last five sessions, the CAC 40 has regained 18%. But it still remains down 25% since the start of the year.

This rebound had been carried by the agreement of the American Senate Wednesday evening on the plan of massive support of the economy of 2.000 billion dollars aiming in particular to help the workers who have lost their jobs and the affected industries, and to buy medical equipment . The text must now be approved by the House of Representatives, controlled by the Democratic opposition, before being sent to Donald Trump for promulgation. The House vote is expected to take place on Friday.

–