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European markets recovery in the wake of a historical meltdown

US, WASHINGTON (NEWS OBSERVATORY) — European markets recovered significantly in the middle of Friday, and Wall Street recorded an increase when it opened, in the wake of a historical collapse against the backdrop of the spread of the emerging epidemic of the Coronavirus.

Across Europe, the indicators have recovered, to make up for some of the losses on Thursday. In Paris, the CAC 40 index rose about 8%, after recording its worst decline in its history on Thursday.

The London, Frankfurt, Madrid and Milan stock exchanges also rose more strongly, with a gain of 17%, equal to the percentage of the crash that occurred on Thursday.

Wall Street indices, on the other hand, rebounded at the opening, as Dow Jones increased by 5.84%, and Nasdaq increased by 5.67%.

“It remains to be seen whether investors will maintain their purchasing positions over the weekend,” said Vincent Boy, an analyst at IGF France Financial Analysis.

Market players fear, in particular, “additional restrictions at the global level, while there are no statistics that allow an assessment of the impact on economic activity in Europe or the United States,” according to the analyst.

Meanwhile, the German government pledged to help companies “unlimitedly”, in a precedent for its regular rhetoric based on maintaining its budget balance.

“The global epidemic has reached its climax, along with monetary and financial support measures (and of course the discovery of a vaccine) that will allow reassurance to return to risky assets,” said Franklin Bechar, general manager of the “Keplink Sciences” Foundation.

And he warned, “Meanwhile, any recovery will only be transient.”

As the new Corona virus began to spread in December, China says the peak of the disease has passed through its territory, but the Covid-19 virus is currently spreading in other regions, especially Italy and Iran.

– “Pour the oil over the fire.”

And unlike European markets, the Tokyo Stock Exchange closed down 6,08% on Friday, after losing 4.4% on Thursday.

Chinese stock markets also fell on Friday, but at a lower level than Tokyo’s decline, as investors looked for profitable deals, according to consulting firm Wanlong Securities.

From Paris to Wall Street, through London and São Paulo, the markets witnessed a major meltdown Thursday, and some experienced their worst sessions since October 1987.

In that year, the announcement of a large trade deficit in the United States and the German Central Bank raising interest rates led to a major market crash that had been accumulating for some time. On October 19, the Dow Jones lost 22.6%.

On Thursday, investors were surprised by the announcement by US President Donald Trump to suspend entry of Europeans from the Schengen area to the United States for 30 days.

Australian National Bank strategist Rodrigo Catrill wrote Friday that the sporadic measures taken by countries and central banks around the world to counter the virus “are pouring oil on the fire” by amplifying the uncertainty.

The European Central Bank revealed Thursday a series of measures to reduce the economic impact of the health crisis in the euro area. But he did not cut interest rates, as he suddenly did the US Federal Reserve.

The Federal Reserve took new measures on Thursday by renewing debt purchases through treasury bonds, and allowing the injection of thousands of billions of new cash, but that did not prevent the Dow from collapsing by 10%.

And the value of the euro fell Friday against the dollar. It reached 1,1105 dollars at 13.10 GMT, compared to 1,1185 dollars Thursday.

Meanwhile, Friday’s oil prices increased significantly towards 13.10 GMT. The price of a barrel of West Texas Intermediate crude reached 33.25 dollars, after gaining 5.56%, while the price of a barrel of Brent gained 5.72% to 35.12 dollars.

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Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.

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