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Wind of panic on the world stock markets, towards their worst week since 2008

Wall Street ended in turmoil on Thursday a rough day for global stock indexes, which are headed for their worst week since the 2008 crisis facing the spread of the coronavirus epidemic across the planet.

The flagship index of the New York Stock Exchange, the Dow Jones, accelerated its losses at the very end of the session to plummet by more than 1,000 points or 4.4%. It has plunged more than 11% since the start of the week.

If this plunge continues on Friday, it would be its largest weekly loss since the peak of the global financial crisis in the fall of 2008.

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Put to the test since Monday, the European markets also all ended in sharp decline: from Paris (-3.32%) to London (-3.50%), from Frankfurt (-3.19%) to Madrid (- 3.55%) or Amsterdam (-3.75%).

In one week, the Euro Stoxx, the stock market index bringing together major values ​​from the eurozone, now shows an almost 10% decline (-9.60%).

Tokyo had set the tone early today with a decline of more than 2% in the face of growing threats posed by the health crisis on the organization of the Olympic Games.

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Oil is also in free fall, the barrel quoted in London (-2.3% to 52.18 dollars) and that quoted in New York (-3.4% to 47.09 dollars) falling to their lowest levels in more than a year after diving more than 10% since the start of the week.

And a sign of an investor rush for assets deemed safer, the 10-year rate on US Treasury bonds declined to 1.2408% during the session, a level never seen before. Germany’s 10-year borrowing rate fell to -0.54%, its lowest since October 2019.

– Emergency plans –

“We don’t have any answers yet and we’re not going to get them for a while, probably not for two to four weeks,” said Maris Ogg, portfolio manager for Tower Bridge Advisors. “The more there are infections linked to the coronavirus, the more we risk staying in the correction zone,” she continues.

“The market environment is quite depressed. It has not yet panicked, but there are first signs of capitulation by investors,” said Andrea Tueni, an analyst at Saxo Bank.

“We are recording the worst week since 2008 on the markets. In weekly variation and speed of movement, it is quite similar to what we could know in 2008”, describes the specialist.

In addition to growing concerns related to the coronavirus, the markets face “winds of panic on technical thresholds” which lead to “forced sales”, that is to say, intervening automatically based on algorithms, explains to AFP. Laurent Gaetani, manager at Degroof Petercam.

The new coronavirus has infected more than 82,000 people and killed more than 2,800 people in around 50 countries and territories. The Director-General of the World Health Organization said Thursday that the epidemic had reached a “turning point” and called on countries to act “quickly” to stem this “very dangerous virus””.

Faced with this spread, no one doubts the impact of the epidemic on global growth, even if it is still difficult to assess.

Many companies have already lowered their targets or shown caution by making an unambiguous link with the coronavirus, like Standard Chartered bank, the world’s number one in beer AB InBev, of the Air France-KLM airline group or of the IT giant Microsoft.

Sign of the drastic measures taken by companies, Facebook announced Thursday the cancellation of its annual developer conference scheduled for … in early May.

Emergency plans with immediate funding are ready to be deployed, notably by the International Monetary Fund, to help countries that cannot cope with an epidemic of the new coronavirus.

In the European Union, Brussels plans to offer in a month, if necessary, “accompanying measures” to economic sectors weakened by the coronavirus, said Thursday the European Commissioner for Industry, Thierry Breton.

“A monetary policy response is possible, the markets are playing with the idea of ​​lower rates in the United States” to support the economy, writes La Banque Postale Asset Management in a note.

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Synthia Rozario
An editorial staff member at The Eastern Herald. Formerly, correspondent of The Eastern Express, Hong Kong.