Recovery fizzled after Black Monday

The sell-off continues one day after the biggest crash on the German stock exchanges in years. Experts expect another case – if the economy is abruptly restricted.

After “Black Monday” on the global financial markets, an expected US aid package against the effects of the coronavirus crisis only impressed investors on Wall Street and in Asia. Announcements on President Donald Trump’s European stock exchanges largely fizzled out on Tuesday.

After a very nervous trade, the leading German index, the Dax, lost interim profits of almost four percent and closed at 10,475.49 points. That is still 1.41 percent lower than on Monday, when the Dax sank by almost eight percent.

As of Tuesday, all of the previous year’s profits have now been erased. The MDax also fell 0.82 percent on Tuesday to 22,901.96 points.

Worldwide stock market crash on Monday

On Monday, the Dax had one of the darkest days in its more than 30-year history. The leading German index suffered the largest percentage daily loss since the terrorist attacks on September 11, 2001.

Investors sold shares in panic because of growing recession worries triggered by the virus and the additional danger of an oil price war. At times, they fled to “safer ports” like government bonds.

When the stock market crashed in the US on Monday, US President Donald Trump reacted quickly. He promised wage tax relief and small business loans. There could also be help for those who are paid hourly wages.

However, no action has yet been taken, so that many European equity markets have reversed in the course of trading, wrote market analyst David Madden from trading company CMC Markets UK.

The situation in Italy could also be responsible for the fall of the Dax on Tuesday: The drastic restrictions on freedom of movement in Italy due to the coronavirus epidemic raise fears that other countries could also be forced to do so, wrote the experts of the fund provider La Financiere de l ‘ Echiquier. This would result in an abrupt economic blockade, which could lead the global economy into recession, it said.

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