–
The European stock markets were hit just before 10 a.m. on Monday by a sudden and heavy sell-off. The Bel20 lost more than 5 percent. Just before noon, the Bel20 tempers the loss to a good percent.
–
European stocks started Monday with relatively mild losses after the deep red data on Wall Street Friday evening. The Nasdaq Composite slumped 4.2 percent after meager numbers from e-commerce giant Amazon.com
and under the influence of rising interest rates. Due to growing inflation fears, the US 10-year yield rose to 2.95 percent, the highest level since 2018.
–
Poor economic data came from China. The increasingly strict lockdowns to nip corona outbreaks in the bud threaten to seriously slow down China’s economic engine. Business confidence indices fell sharply and some suggest a contraction.
–
Sudden Dive
Not much good news, then, but just before ten o’clock the indices suddenly took a heavy plunge. Multinationals such as the department store chain Ahold Delhaize
the materials group Umicore
the pharmaceutical company UCB
the Dutch maker of chip equipment ASMI
or the Heineken brewer
suddenly lost almost 10 percent. For many stocks, trading was suspended by the automatic trading inhibitors.
–
The Bel20 touched 3,891 points at 10 a.m., a decline of 5.2 percent compared to Friday’s close. The Dutch AEX index fell 4.2 percent around the same hour. The other European indices kept the losses more contained. For the EuroStoxx50, the maximum loss was 2.9 percent.
–
Perhaps a major player – such as a hedge fund or a large trading house – has started dumping stocks, which the computer models of algorithmic traders have capitalized on and magnified the downturn.
–
‘We saw it happen here too, without any news,’ says a trader from a Belgian trading room. “Perhaps a major player – such as a hedge fund or a large trading house – has started dumping stocks, which the computer models of algorithmic traders have responded to and magnified the downturn.”
–
“I have no explanation for what happened. It went very quickly’, says another Belgian trader. Trading in various shares was also suddenly suspended. After the suspension, they went up again. It’s very strange.’
–
Day off
The day off in London may also play a role. Anglo-Saxon traders and market makers have a large market share in European stock market trading. The absence of British parties probably magnified the downturn.
–
Meanwhile, some sources refer to Norway, where the wave of sales is said to have started. Sources speak of a miscalculation of index futures that would be the basis. There is no confirmation of this. Euronext Oslo reported to the local press that there was no news that could have triggered the sell-off. The fair did start a ‘routine investigation’.
–
Meanwhile, calm has returned. At around half past eleven, the Bel20 is still one percent lower. The EuroStoxx50 still loses 1.7 percent.
–
–
