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The stock markets are giving way. Rising corona numbers and fears of an escalation of pandemic measures are driving investors out of the market.
An expression of concern: a stock trader looks at the monitors in Frankfurt am Main.
Photo: Boris Rössler (Keystone / DPA)
“Another lock would be the worst, not just for the market,” said one broker. “The coronavirus makes European equity investors fear again.” Therefore, it is not surprising that the Swiss stock market barometer of fear, the VSMI volatility index, has risen to its highest level in about a month.
The second issue that determines the market is the stalled negotiations on a new stimulus package in the US Republicans and Democrats continue to clash with little rapprochement. Treasury Secretary Steven Mnuchin said it was difficult to find a compromise before the presidential election in early November. «This sets the course. Investors must stay covered until after the US election, ”said a trader.
SMI and DAX yield
The Swiss benchmark SMI closed 2.2 percent in the red at 10,067.96 points. This corresponds to the highest discount percentage in four months. Dax and EuroStoxx50 on Thursday fell about 2.5 percent each to 12,703.75 and 3,189.42 points. The US Dow Jones Standard Value Index lost half a percent. The second wave of the corona pandemic in Europe had also previously concerned Asian investors. In Tokyo, the Nikkei index comprising 225 stocks was down 0.5 percent to 23,507 points.
In Zurich, the biggest pressure on the overall market came from the Roche heavyweight index. Stocks lost 3.5 percent after the group was disappointed in drug sales in the third quarter. Shares of luxury goods companies Swatch and Richemont suffered economic concerns, falling about 2.5 percent each. Down nearly four percent, reinsurer Swiss Re’s shares were the biggest losers on the standard stock index.
The only winner in the SMI was Lonza with a plus of 1.6 percent. The contract manufacturer of pharmaceuticals promised strong growth and better margins in the coming years.
Oil and travel titles for sale
Due to new pandemic restrictions, share certificates for travel and tourism assets also flew out of warehouses. The European industry index lost almost two percent. Its oil and gas industry counterpart fell 3.5 percent on the back of falling oil prices. The North Sea Brent variety became cheaper due to speculation that demand would fall again by three percent to $ 42 per barrel (159 liters). “If demand deteriorates markedly, OPEC + will not be able to avoid increasing production if it does not want to risk another oversupply and another price drop,” said Carsten Fritsch, an analyst at Commerzbank.
In this context, more investors fled to the “safe haven” of bonds. The world’s main currency was also in demand. This helped the dollar index, which reflects the exchange rate of the major currencies, to gain 0.4 percent. In return, the euro fell to $ 1.1695.
Pandemic restrictions are tightening everywhere, said Derek Halpenny, chief analyst for Europe at Bank Mitsubishi UFJ. “All of this points to a greater burden on the economy in the fourth quarter and justifies an adjustment in share prices.” At the same time, the balance sheet season has been rather disappointing so far, said analyst Pierre Veyret of brokerage ActivTrades.
