The stock exchanges in Paris, Frankfurt, London, Madrid and Zurich all fell due to the spread of the coronavirus epidemic. The IMF director believes that the Covid-19 virus could “jeopardize” the recovery of the global economy.
The spread of the coronavirus epidemic is not without consequences for the world economy. The stock markets gave in to panic on February 24: the places of Paris, Frankfurt, London, Madrid and Zurich fell by more than 3%. In Italy, a country particularly affected by the coronavirus, the Milan stock market collapsed by more than 4%.
In France, the CAC 40 posted a decrease of 3.16%. The automotive and luxury sectors are the most affected, as they are very exposed to the evolution of global economic growth. Thus, at 9.25 a.m. on February 24, there was a decrease of 4.9% for Renault 4.9% or 4.1% for LVMH.
The situation in Asia is also worrying. The Chinese stock markets ended the session on February 24 in dispersed order: Hong Kong and Shanghai ended in red while the Shenzhen stock market closed very slightly in green.
While stocks plunged, primarily those of the sectors exposed to China (commodities, automotive, tourism and luxury), investors fell back to safe havens, namely government bonds and gold.
“The coronavirus epidemic is spreading outside of China, to countries like South Korea, Italy or Iran, which could cause huge disruption to global supply chains if containment measures are in place. more and more numerous, ”explains Tangi Le Liboux, at the broker Aurel BGC.
International organizations are concerned about the increase in the number of cases outside of China, particularly in South Korea, which has seen a rapid increase in the number of cases with more than 700 new infections in less than a week.
In Italy, where four deaths from the new coronavirus and 165 cases of contagion have been recorded, eleven cities have been placed in quarantine for two weeks.
The Middle East is also affected: Iran has eight deaths and 43 cases of contamination while in Israel, the authorities confirmed on Friday the first case, that of a woman who had been placed in quarantine on the liner Diamond Princess then authorized to land by the Japanese health authorities.
The recovery of the economy “at risk”?
A first case of coronavirus was detected in western Afghanistan in an individual from Iran.
Beijing has recognized that the new coronavirus constitutes “its greatest health emergency” since 1949. The city of Wuhan, where the new coronavirus appeared in December, renounced on February 24 to lighten the quarantine measures in place for a month, returning on an announcement made a few hours earlier.
The G20 has certainly promised measures to face the risks, “but this time, the markets will not be able to rest on anticipations of new measures on the part of central banks to limit their decline,” said Tangi Le Liboux.
At a G20 meeting in Saudi Arabia, the Director of the International Monetary Fund (IMF), Kristalina Georgieva, said that “the Covid-19 virus, a global health emergency, has disrupted economic activity in China” and could ” jeopardize ”the recovery of the world economy. She said the impact of the virus on growth would be around 0.1 growth point.
“As the publication of the 2019 results comes to an end, the effects linked to the coronavirus could be more and more important on the publications of the first quarter and the alerts on results could be announced in many sectors by then”, warns in a note Vincent Boy, analyst at IG France.
In terms of statistics, all the details concerning the next Chinese economic publications will be analyzed closely, as will the figures for gross domestic product in Germany on Tuesday and that of the United States on Thursday, as well as consumer confidence in the world’s leading economy on February 25.
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