(CercleFinance.com) – The CAC40 ends up close to the day’s lows, down -4% to 5.792 after registering a floor at 5.765, a intraday low since December 4, the index having closed at 5.786, 7 on December 2.
The CAC 40 drops by almost -250 pts, support for 5.870 is pulverized, the index has lost more than 3% since January 1 … and the most striking is the explosion in volumes with 7.65 billion euros traded , the equivalent of a ‘big session of the 4 witches’ … but without arbitration, with very massive dry sales (reduction of positions).
This ‘air gap’ completely takes the upside momentum fueled by the liquidity of the FED (tens of billions of dollars per day) in recent weeks.
After having almost ignored and denied possible negative impacts of the coronavirus pandemic (because it was so far from Europe, a Sino-Chinese problem as Trump claimed a week ago), the markets are suddenly seized by fear: the virus is at our borders (Italy), cases are already suspected in France (Caen).
The IMF is in turn alarmist, evoking serious repercussions, the WHO fears a ‘pandemic’ (the epidemic out of control and current quarantine measures).
The virtual threat of the ‘Covid19’ suddenly becomes concrete, the reference to SARS (which did not disrupt global growth or the rise in markets in 2003) seems to have no relevance whatsoever: it was nevertheless for a month the best argument of ‘bulls’ to put the avalanche of bad news related to the pandemic into perspective.
Wall Street had reopened down -3%, losses seem to widen a little more clearly in mid-session with -3.7% on the S & P500 and -3.9% on the Nasdaq.
The Dow Jones drops -1000Pts, below 28,000 (27,990) and suffers its heaviest decline in 48H (-4.7%) since August 14/15, 2019, the historical index clearly turns red for the year 2020.
Unstoppable proof of the increase in stress, the US T-Bonds pulverize their absolute records, their yield drops symmetrically to the lowest in history, from -10Pts to 1.36% over the ’10 years’ and 1.82% over ’30 years’.
Gold – another safe haven asset – soars around $ 1,685, expressed in euros, an ounce breaks an absolute record at over 1,530E / Oz (absolute record).
The barrel of oil unscrews by -5% to $ 50.5 on the NYMEX … and CGG plunges by -8.6%, Vallourec by -5.6%.
On the coronavirus front, Beijing said this weekend that the number of new Covid-19 cases outside of Hubei province – considered to be the epicenter of the epidemic – was on the decline. Chinese authorities have said they have identified 409 new cases in the mainland, including 398 in Hubei, for 149 new deaths.
But it is the recent developments of the disease in South Korea and Europe, especially in Italy (the virus has already killed four people and contaminated nearly 170 people), which are considered much more worrying. The Milan Stock Exchange fell, by the way, by -6% (to 23,275) an hour before closing … unheard of since June 24, 2016.
New activity indicators will be published in the coming days. ‘The economic surveys unveiled (last week) suggested that the eurozone was resisting the coronavirus better than expected, recall the teams of Capital Economics. But the details of the PMI indices also showed that the virus had affected the region’s manufacturing sector and the additional downside risks have not subsided. ‘
New indicators of the business climate in the industry will also be presented in the United States. Investors will follow the Richmond Fed index tomorrow as well as the Chicago PMI on Friday.
In the meantime, the Ifo institute reports that its sentiment index for German business circles has improved slightly, from 96 in January to 96.1 this month, while the consensus feared on the contrary a contraction around 95.
In today’s news, tourism is strongly impacted with Air-France / KLM at -8% (close to 8E at the lowest of the day), Accor at -5.7%.
As the Geneva Motor Show approaches (will it be maintained?), The Renault group (-6.5% to $ 29.6, new floor of the decade) unveils this morning the electric version of its flagship city car, the Twingo. Called Z.E., this version is thus equipped with a 22 kWh battery, which offers between 180 and 250 kilometers of autonomy depending on the cycles, for a maximum speed of 135 km / h.
Renault is not the only victim in the auto sector: Plastic Omnium, which has a strong presence in China, lost -6.2%, Peugeot -7%.
In the wake of Nasdaq, ST-Micro plunged by -7% (comparable decline of AMD and Nvidia).
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