Coronavirus: non-Asian stock markets catch fire in turn

Audio 03:53

By: Aabla Jounaïdi Follow

After weeks of relative indifference, non-Asian stock markets began to react to the coronavirus. New outbreaks are developing and expanding suddenly outside of China. In Korea, the Middle East and now in the heart of Europe, and particularly in Italy. The draconian sanitary measures taken by the Italian authorities led to the fall of the Milan Stock Exchange.

Publicity

While not far from there, it was announced a seventh Italian death, the Milan Stock Exchange experienced the largest decline, in one session, in the last two years: -5.43%. In the wake of the Asian stock exchanges, the European stock markets react to the sudden worsening of the health situation last weekend. In Paris, London and Frankfurt, the indices all finished down 4% on average. Unheard of since the Brexit vote. Same thing in New York, where the benchmark S&P 500 fell 3.35%. And at the opening, this Tuesday, the Asian markets display still gray mine.

Long reaction time markets

For a long time, the financial markets outside Asia thought that the crisis was minor or that it could be contained and confined to China. Now it becomes clear that this is a crisis that will last, and above all that will continue to spread. The World Health Organization fears a pandemic with the multiplication of outbreaks everywhere. The fact that a home is now present in Europe, a free trade area, raises fears of much greater impacts. These impacts are now clearly perceptible in the sectors most exposed to the Chinese market: air, automobile, luxury, hotel or even semiconductors whose indices in Europe unscrewed this Monday, February 24. If the stock markets have been slow to respond so far, it's also because they tend to ignore systemic risks. At least, to think that the financial authorities will be there to solve all the problems if necessary. As they have done regularly since the 2008 financial crisis.

Towards lower rates by central banks

As the economic outlook darkens, investors are betting more than ever on a rate cut by central banks. All the more so as the economic outlook grim. The International Monetary Fund is planning to depress the prospects for global growth and the G20 countries meeting last week in Saudi Arabia assured that they were closely monitoring the economic and financial impact of the coronavirus.

Investors therefore bet that the European Central Bank and the US FED could draw a further cut in their key rates, respectively in March and July.

For the time being, this new batch of uncertainties is redirecting investments towards safe havens. Precious metals, starting with gold, which traded yesterday at $ 1682 an ounce, the highest for 7 years. And then, government bonds, whose yields hit new lows yesterday in the face of the influx of investors.

IN SHORT

Another giant of fossil energy who gives up his exploration projects in the Australian Great Bay . After the British BP and the American Chevron, it is for the Norwegian group Equinor to announce today the abandonment of its projects in this sector with a very rich biodiversity where in particular whales and orcas give birth. But it is not for environmental reasons that Equinor takes this decision. In fact, for the company, this site may not be profitable enough compared to other projects. However, Australian environmentalists after the difficult months that the country has just experienced with the devastating fires are relieved. The risk of a giant oil spill had been repeatedly emphasized by local NGOs.

Cuban cigar sales victim of political upheavals . Hong Kong and Lebanon are on fire and it is indeed the sales of cigars on these buoyant markets which are suffering. According to one of the directors of Habanos SA, the company that controls the promotion, distribution and export of Cuban cigars, sales increased by 2% last year, but this is the weakest growth of these Last 6 years. And the development of the coronavirus suggests the worst in China, one of the main consumers of Cuban cigars. Even if for now, measuring the impact is impossible.

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• coronavirus
• Industry
• Health and Medicine
• Italy
• China

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