To those who have grown tired of watching the yo-yo on Wall Street, we give the final result: it is a drop, and quite strong. Since its highest point in February, Wall Street has lost nearly 13%, despite a surprise half-point cut in interest rates decided on Tuesday by the US Federal Reserve. Despite a $ 8.3 billion ($ 7.3 billion) budget package signed by Donald Trump on Friday to fight the epidemic. Despite good employment figures, which confirmed that the health of the US economy was excellent before the explosion of the coronavirus epidemic (273,000 jobs created in February; unemployment rate at 3.5% ). Despite Joe Biden's spectacular comeback during Super Tuesday, which removes the risk of socialist Bernie Sanders winning the presidential election and rebounded health care values.
But the extension of the Covid-19 epidemic two weeks ago in Italy, this week in the United States (327 cases including 17 deaths), changes the situation. We have gone from a Chinese epidemic having an impact on the rest of the world to a situation affecting the entire planet: Europe and Japan first, which were on the brink of recession, then the United States, supposed to rebound after the commercial truce signed with China, Canada and Mexico. In New York, travelers returning from Italy, Japan or South Korea are expected to have a 14-day auto quarantine while public meetings are getting smaller. In Austin, Texas, the South by Southwest rock festival has been canceled, while the city of Seattle is almost paralyzed.
Severe losses on European markets
In Europe, the indices all ended the week on severe losses: Milan and Madrid losing around 3.50% on Friday, Frankfurt ending on a fall of 3.26%, London of 3.62%, and Paris plunging of 4 , 14%.
The fall of the markets has technical aspects: the fall leads to the fall, many managers being obliged because of their prudential rules to reduce their exposure to limit losses. Directly affected sectors are hit, such as airlines and tourism, as are multinationals with cut supply chains. Oil companies already in bad shape in Texas are in free fall, weighed down by the brutal fall in crude oil prices. Operators are fleeing SMEs, which are more likely to experience cash crises leading to bankruptcy. They take refuge in very large companies, sitting on billions of liquidities likely to support a seat and US treasury bills.
