Investors around the world record losses due to fear of the economic consequences of the disease
The World Health Organization (WHO) has stated that the coronavirus is not a pandemic yet, despite the latest figures of rapid contagion and death in Iran, South Korea and Italy have disarmed the confidence of world investors who now fear strong negative economic consequences. The Dow Jones, the most volatile index of the New York Stock Exchange, lost 1,031.4 points at the close of the Exchange (-3.56%).
It is the third strongest loss in its history in points (not in percentage) and with it earnings are eliminated from what you had during the year.
All markets in Asia started the week with heavy losses, from Australia to India through Taiwan. The wave of falls and negative numbers spread to Europe, where the largest stock market crash was experienced since the Brexit referendum. There have been 220 cases registered in Italy and five deaths in one of the key areas from the economic point of view of the country.
In the US there was no containment when the clock marked the opening time. All indexes closed with heavy losses. In addition to the Dow Jones, the Nasdaq fell 335 points (-3.71%) and the S&P 500 was left 111.8 points, the equivalent of a 3.35% drop which also eliminates the gains of all 2020.
The titles of companies related to tourism and travel in addition to technology are the most lost in this session.
The travel sector is one that suffers the most from quarantines and fear of displacement and in the case of technology companies, they are facing factory stoppages in China that are key to their products.
The price of oil also falls
The price of oil is also at the mercy of downward bets. Brent fell 4.04% and the WTI, which is the barrel sold in the US, lost 4.29% to be just half a dollar above $ 50 per barrel.
The price of oil is key to the smooth running of the fraking sector in the US because the costs of operating shale oil farms, which has allowed the country to be a producing power, are very high and a low price per barrel compromises profitability of the production.
The other vital point of the market, public debt, clearly showed feverish symptoms. The 10-year Treasury bond posted a 1.37% return when Friday closed at 1.47%.
If it was already under the percentage of profitability last week, what happened on Monday shows how the state debt has become the refuge place for investors leaving the stock market.
The debt, or bonds, moves backwards than the shares: the more demand there is for your purchase, the less profitability you pay for it from the state. The fact that their profitability has fallen means that many investors are betting on the safe value that is the State against which it is perceived as a greater fragility of the companies in turbulent moments like these.
The fall of the 10-year bond, which reports long-term rates such as mortgages (which may continue to fall) is one of the most studied vital signs by economists who now anticipate that the Federal Reserve may have reasons in March to lower interest rates again.
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