Coronavirus ruined European stock markets
Equity markets lived through their worst day in three years. The European Stoxx Europe 600 Index lost 3.6%, according to Forbes. Engineering, mining, and tourism sectors came off the worst. Air carriers are uncontrollably losing value, the price of Air France securities — KLM fell by 9.5%, the British carrier EasyJey by 14%, and the largest European company Ryanair by 11%. Also, manufacturers of premium goods LVMH lost 7.2%, and medical products Roche Holding AG — 2.3%.
The market collapse was caused by the coronavirus, whose death toll soared in South Korea, Italy and Iran. Governments are introducing restrictive measures that are severe enough to slow the spread of the disease.
China, where the virus was detected, has also failed to cope with the coronavirus at the moment. The country’s economic activity is slowing down: the slowdown in supplies, sales and the level of production of consumer goods scares investors. Most likely, according to Cowen & Co analyst Oliver Chen, people will go less shopping and travel less.
Other indices also dropped on February 24. For example, the South Korean Kospi lost almost 3.9% for the first time since 2018, the American S&P 500 — 2.2%, the Hong Kong Hang Seng – 1.79%, the Australian S&P/ASX 200 reduced by 2.5%. Oil was also among the victims of the asset collapse. Brent crude has lost 3.79% in value, while WTI fell by 3.82%.
As a result, many investors decided to ditch stocks as an investment vehicle and switched to the safest assets: precious metals and United States government bonds. At the same time, the profitability of government bonds lost nine points due to the growing demand. Gold, meanwhile, has risen in price by 2%, having updated the maximum value for the last seven years.
Citigroup analyst Okash Doshi noted that if the virus spreads outside China’s borders, the cost of raw materials will also face difficulties.