Profit taking on the markets, before a risky weekend

After three days of a strong rebound encouraged by unprecedented budget support, and on the eve of a test weekend to test the effectiveness of containment in Europe, the stock markets eased on Friday, March 27.

On Wall Street, the Dow Jones fell 4.06%, the Nasdaq by 3.04% and the S&P 500, which reflects the performance of the 500 largest US companies, by 3.79%. The three major New York indices, however, recorded very strong weekly growth.

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Putting an end to three sessions of marked increase, the European stock exchanges also ended in the red on Friday, from Paris (-4.23%) to London (-5.25%) via Frankfurt (-3.68%) , Milan (-3.15%) and Madrid (-3.63%).

"This is an understandable correction session given that since last week's lows, the markets have rebounded by around 20 % at closing ” of Thursday, underlines to the Agence France-Presse (AFP) Guillaume Garabedian, head of advisory management at Meeschaert Gestion Privée. So "We can perfectly understand that on the eve of a weekend, with its share of potential surprises on the health front, the markets are breathing a bit".

"See if the containment measures work in Europe"

Otherwise, "The absence of a decision at the meeting of the 27 countries of the European Union was a great disappointment" European markets, explains Jeanne Asseraf-Bitton, head of Lyxor AM’s investment strategy, interviewed by AFP.

Under pressure from Italy, where the pandemic caused by the new coronavirus has claimed the highest number of deaths so far, they have however agreed to examine within two weeks stronger measures to deal with the announced recession .

After announcements of massive budget and monetary support plans in the past few days, particularly the more than $ 2 trillion in aid promulgated by Donald Trump in the United States after their adoption by Congress, the markets were once again scrutinizing the health situation.

"What will be very important in the coming days and weeks is to see if the containment measures that have worked in Asia also work in Europe, according to Garabedian. If indeed, at the end of the weekend, we realize that the number of new cases is declining in Italy, it is likely that the markets will be able to approach next week more serenely. "

"For volatility to drop substantially, some of the very many uncertainties will have to be met" around the evolution of the spread of the virus "Get up", also judged Mme Asseraf-Bitton.

The euro continues to appreciate against the dollar

The new coronavirus has now infected more than half a million people worldwide and killed more than 25,000 people. If the epicenter of Covid-19 currently remains Europe – where nearly 1,000 people died in Italy in 24 hours but where contagion continues to slow, according to official figures -, the pandemic is also progressing exponentially in United States, now the most affected country with more than 97,000 cases reported.

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"The fact that the numbers are not going to be good in the next few days in the United States" is already built into market prices, but what's not is "The assumption of a runaway of the number of cases without reaction of the various American states", warns Mr. Garabedian.

Oil prices fell on Friday, in the wake of their relapse the day before, undermined by a stalled demand in the face of a plethora of supply. Brent crude fell 5.4% after hitting $ 24.13 a barrel, the lowest since 2003, and WTI lost 4.8%.

The euro continued to appreciate against the dollar, at 1.1136 (+ 0.94%) on Friday around 10 p.m. Paris time, the greenback registering its largest weekly decline since 1987.

In the debt market, borrowing rates have declined, with the exception of that of Italy, which has increased slightly. "Whenever there are some fears on the market", rates "Assets that serve as a safe haven", like Germany or France, "Come down a bit", notes Mme Asseraf-Bitton.

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The World with AFP


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