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The Fed bazooka does not stop the sell-off on Wall Street

Investors do not seem to be reassured by a massive intervention by the American central bank. They also want to see massive fiscal policy interventions. But they are not yet in a dry cloth. And even then it is not certain that everything is already over.

The gigantic aid packages from governments and central banks are moving stock exchange trading – at least in the short term, admission: March 20.

Lucas Jackson / Reuters

The week started with further price drops on Wall Street. The Dow Jones Industrial fell 3% to just 18,592 points and the S&P 500 fell 2.9%, while the Nasdaq only lost 0.3% – despite the American central bank’s fight against the corona crisis is breaking all “monetary policy dams”. It is ready to buy unlimited government bonds and mortgage bonds in order to virtually guarantee the flow of credit to companies as well as government and private households.

The announcement of the extraordinary measures had initially given the market a little boost, but given the increasing number of fatalities caused by the corona virus, a flood of “lockdowns” in other member states and the impending economic stimulus package, it was not enough to give a stronger price recovery from the massive losses of the past few days. Investors had hoped the US Senate would adopt a $ 1000 billion coronavirus spending package this weekend, but Democrats and Republicans still don’t agree on the details.

Strong price fluctuations

Dow Jones Daily Changes in%

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This still leaves open the question of what will stand in the way of the upheavals, which will face a sharp decline in economic activity in the first and probably also in the second quarter of the current year. Experts from various investment banks expect American gross domestic product (GDP) to decline by up to 30%. Goldman Sachs, for example, expects real GDP to fall by 24% in the second quarter because the economy in a large part of the country is somewhat in a coma. The decline would be two and a half times the previous post-war record.

The S&P 500 is now around 34% below its record high in February and the lowest since the fear of the corona virus came across Wall Street. On Monday, it was mainly the papers of the department stores Macy’s and Kohl’s that fell, by 17 and 20% respectively, after the first-mentioned company announced the suspension of the dividend payment and no longer dared to give an outlook on the further operational development. The papers from Gap, V.F., Nordstrom were also on the sales list. Refining companies HollyFrontier and Valero Energy also suffered significant losses. This should be mainly due to the low petrol price. This has dropped to the lowest level in 20 years on the futures market.

Bear market in motion

Dow Jones Index, points (in thousands)

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On the other hand, there was hope of a bailout in the shares of the cruise lines Royal Caribbean and Norwegian, the battered aircraft manufacturer Boeing, and the entertainment group Wynn Resorts, and their paper rose by a low level of up to 18%. On Nasdaq, paper from memory and chip makers such as Western Digital, Microchip Technology, Intel, ASML, Micron Technology, Applied Materials, Advances Microdevices and NXP Semiconductor benefited from the first signs that business in China is slowly beginning to normalize again.


Gasoline futures fall to 20-year lows

Gasoline futures have been at their lowest level in more than two decades as the coronavirus pandemic slows demand. Nymex futures prices fell 32% on Monday. The fall in prices has also led to far-reaching cuts in refineries across the country. Profit margins on fuel production have collapsed and the difference between crude oil futures on the West Texas Intermediate variety and on gasoline has become negative for the first time since 2008.

Gasoline price in the low

Future at the Nymex, in $ per gallon *

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Crude oil and fuel prices fell sharply this month as Saudi Arabia and Russia offer quantities like never before in the battle for market share. This puts the sector under further pressure after having to cope with the weak demand triggered by the antivirus measures. In the meantime, there seems to be hardly any storage capacity left for oil and related products, and space for the storage of aviation fuel is also becoming scarce. According to analysts, retail prices are likely to drop below $ 1.99 a gallon in the next three days and below $ 1.50 by mid-April. In normal times that would stimulate the economy, but they are not normal.


In Switzerland: taxes on a broad front

The Swiss stock market also got off to a weak start to the new week. The Swiss Market Index (SMI) fell 5.37% on Monday to 8161 points and the broad Swiss Performance Index (SPI) fell 5.11% to 9991 points.

The stocks of cyclical companies such as Adecco (-9.4%), Logitech (-6.8%), ABB (-6.7%), LafargeHolcim (-6.6%) or Clariant (-6 , 3%). A report from the Finnish competitor Kone also affected the lift builder Schindler (-5.4%). This has lowered its expectations for 2020 due to the Corona crisis. Most market observers now believe that a recession is inevitable, explained Börsianer with regard to the cyclical values. Companies that are more dependent on economic development are likely to suffer from this.

In the healthcare sector, Alcon also fell by 10.6% and Sonova by 7.3%, which is above average. The big bank stocks Credit Suisse (-4.7%) and UBS (-5.7%) closed again in deep red. Partners Group (-2.2%) and especially Julius Baer (minus 1.2%) performed significantly better. Analysts’ comments were received selectively from insurers Swiss Re (minus 0.9%) and Zurich (minus 4.7%). Various experts had recently written here that the high dividend yields should slowly but surely prove to be a price prop.


Defensive values ​​do not support

The defensive values ​​did not represent a downward support. The two pharmaceutical stocks Novartis (minus 5.4%) and Roche (minus 4.8%) fell significantly, as did Nestlé (minus 6.1%). If the index heavyweights are sold too strongly, this is a clear sign that a broad sell-off of stocks is in progress. Traders mentioned futures-related sales in this context. Roche had recently made a name for itself with its efforts to find cures in the fight against the virus. In addition, orders for a diagnostic device have skyrocketed. Swisscom shares closed 6.4% lower, which means that all SMI stocks again had a negative annual performance.

In the broad market, papers from Bobst (minus 3.7%), Autoneum (minus 6.6%) and Datacolor (minus 10.2%) attracted a lot of attention. Bobst had already announced on Friday that production at several locations would be reduced to a minimum. Autoneum and Datacolor, in turn, reported corona-related profit warnings. Like Kudelski’s titles, they dropped by a significant 14.3%. According to traders, the recent fall in prices made the two outstanding bonds uneasy, suggesting some financial stress. The technology group is in the middle of a realignment that is associated with high upfront investments. The two “travel stocks” on the Swiss stock market once again had a difficult time: Zurich Airport lost 11.3% and Dufry 7.6%. The mail order pharmacy Zur Rose remains a darling of investors, and its paper prices rose by a further 4.9%. These increased for the sixth day in a row.


The DAX also in the red

The German DAX index also suffered losses on Monday. After a roller coaster ride of the courses, the minus signs dominated at the end of the trading day. The index went to the finish with a loss of 2.10% at 8741 points. Since the onset of the coronavirus panic four weeks ago, he has now incurred an overall loss of 35%.

The courses were already submerged in Asia – with the exception of Japan. The Chinese Shanghai Composite Index lost 3.1%. The Hang Seng Index in Hong Kong was almost 5% lower than on Friday. On the stock exchange in Seoul, the leading index Kospi declined by 5.3%.


In Asia, only Japan is up

On the Seoul stock exchange, however, the downturn continued due to investors’ concerns about the economic consequences of the coronavirus pandemic. The leading index Kospi fell by 83.69 points or 5.3 percent to 1482.46 points.

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