Paris, Frankfurt and London finished down 1.51%, 1.41% and -0.09%. The SMI almost ends up in equilibrium.
–
The optimism will have been short-lived: European stock markets closed lower on Tuesday after attempting a precarious rebound until early afternoon, in the aftermath of the worst session since the 2008 crisis, which eroded confidence investors.
Around 3.30 p.m. GMT, several European stock exchanges turned into negative territory after having attempted an evanescent technical rebound the day after their debacle. Paris (-1.51%), Frankfurt (-1.41%), London (-0.09%), Madrid (-3.21%), Milan (-3.28%), Amsterdam (-1, 21%), Brussels (-0.61%) and Lisbon (-0.69%) then closed in decline. In Zurich, the SMI ended on a slight decline of 0.01%.
On the other side of the Atlantic, Wall Street was also very undecided. Around 5:00 p.m. GMT, the Dow Jones Industrial Average, which had also briefly gone into the red, returned to positive territory (+ 1.05%). The highly technological Nasdaq index gained 1.20% and the broad S&P 500 index 1.42% in a completely disoriented environment.
The turnaround in Europe occurred at the end of the session when the markets appeared Tuesday morning reassured by the rise in oil prices and by hopes of budgetary measures to fight against the coronavirus. The Asian stock markets had even raised their heads a little.
“These are not a few somewhat uncertain classified ads on a stimulus from Trump or the European Central Bank that will restore confidence in the future as quickly,” said AFP Mikaël Jakoby, head of continental Europe brokerage at Oddo Securities. .
“There are a lot of question marks and we are still in the ascending phase of the number of patients with coronavirus”, he adds, estimating that despite the attempt of “technical rebound”, “we do not erase anything optimism lost in the short term ”.
Short-lived optimism
The sharp rise in oil prices, about 8% for US crude and Brent, was not enough to reassure the markets. Only the financial centers of the Gulf oil states rebounded strongly on Tuesday, after two days of massive losses.
The two contracts had lost about 25% the day before, in the wake of the price war launched by Saudi Arabia after the breakdown of negotiations with Russia last weekend. This had caused a violent storm on Monday on the world’s stock markets, already frightened by the coronavirus epidemic.
Russian Energy Minister Alexander Novak said on Tuesday that he would not “close the door” on the alliance between the Organization of the Petroleum Exporting Countries (OPEC) and Russia to stabilize the oil market. Saudi oil giant Saudi Aramco has announced that it will turn on taps in April at 12.3 million barrels a day, but will not cause major price turmoil.
Meanwhile, Italy is maneuvering to try to avoid a collapse of the third European economy, asphyxiated by the new coronavirus. The government asked its 60 million fellow citizens to stay cloistered at home until Monday April 3 to limit the spread of the epidemic.
European Commission Vice-President Valdis Dombrovskis on Tuesday welcomed the “bold steps” taken by Italy, which he said he was ready to support by “any means” possible.
Market players are awaiting announcements of fiscal stimulus in Europe and the United States but “in a somewhat uncertain future”, underlines Mr. Jakoby.
Question of timing
Donald Trump wants to quickly deploy a series of measures to support an economy threatened by the consequences of the epidemic and thus try to preserve one of his main campaign arguments in the race for the White House. He must give a press conference to detail “major” and “far-reaching” measures.
The American president notably mentioned “a possible cut in wage taxes” to be discussed on Tuesday between members of his administration and congressional officials.
The Japanese government is also expected to announce a financial assistance plan to deal with the economic consequences of the coronavirus epidemic.
Europe is not to be outdone since the European Central Bank is eagerly awaited at its meeting on Thursday and could deploy a range of measures, unprecedented for some, in the face of the threat posed by the new coronavirus to an economy already slowed down in the eurozone.
“The announcement that we are going to have a monetary policy stimulus is certainly positive but will not come to pass immediately,” said Art Hogan, strategist at National Holdings.
–
