In this context, the shares of the “old continent” registered their worst fall in three months on Monday. The Frankfurt Stock Exchange fell 4.4%; Milan and Paris fell 3.7%, while Madrid sank 3.4%, as did London. The pan-European STOXX 600 index fell 3.2%, a decline not seen since the beginning of June.
On concerns about new infections, the travel and leisure index collapsed 5.2%, accumulating its worst two-day decline since April, with airlines such as IAG – which owns British Airway – plummeting 12.1%. In addition, Lufthansa plunged 9.5% after further cutting its fleet and workforce due to the coronavirus crisis.
Parallel, European banks fell 5.7% to hover around record lows after a joint report by 108 media outlets warned of a possible link between entities such as HSBC and Deutsche Bank with astronomical amounts of “dirty money.”
These documents refer to some 2 trillion dollars (1.7 trillion euros) of transactions between 1999 and 2017 originating from drugs and criminal acts, and even from embezzled fortunes in developing countries.
For its part, on Wall Street, the Dow Jones Industrial Average fell 1.8% to 27,147.7 units; the S&P 500 lost 1.2% to 3,281.06 units and the Nasdaq Composite was down 0.1% to 10,778.80 units.
Given this climate, the CBOE volatility index of the market (VIX), a measure of investor anxiety, soared to its highest level in nearly two weeks.
The death of US Supreme Court Justice Ruth Bader Ginsburg also made it less likely that another stimulus package will pass through Congress before the November 3 presidential election, aid that remains “stalemate.” for three months.
This caused big falls in the health sector. Healthcare providers came under pressure from uncertainty about the fate of the Affordable Care Act (ACA), better known as Obamacare, with Universal Health Services shares falling sharply.
Dollar
Faced with uncertainty, the dollar rose after two weeks of declines. “What we are seeing with the dollar is a bet on a safe haven without risk,” said Erik Bregar, head of foreign exchange strategy at the Exchange Bank of Canada in Toronto, adding that the trigger was fear in European morning trading of a new confinement in the United Kingdom due to the coronavirus.
The dollar index, which compares the greenback with six prominent currencies, was up 0.85% to 93.297 units, while the euro lost 0.9% to $ 1.1734, the yen weakened 0.1 %, to 104.70 units per dollar, and the pound sterling lost 0.9%, to 1.2797 dollars.
Metals
Gold and other metals suffered sharp declines, affected by an appreciation of the dollar, in a week in which investors will be watching the speeches of the authorities of the Federal Reserve in search of clues on more stimulus measures to revive a economy hit by coronavirus.
Gold lost 2.1% to $ 1,909.05 an ounce, after hitting its lowest value since Aug. 12 earlier. Prices fell almost 10% from an all-time high reached at the beginning of last month, due to a drop in hopes for new stimuli.
“Gold should be trading higher with safe haven demand, but it’s kind of a repeat as in the spring when the market sell-off, participants have been selling assets across the board,” said Bob Haberkorn, strategist Market Senior at RJO Futures
More strongly, spot silver collapsed 8.3% to $ 24.53, its lowest level in more than a month.
Petroleum
Oil prices fell sharply due to the return of Libyan exports and fear of a new confinement due to the outbreaks of coronavirus, which would be disastrous for demand.
WTI’s barrel for October delivery lost 4.4% compared to the close on Friday and closed at $ 39.31. For its part, that of Brent from the North Sea for delivery in November fell 4% in London and ended the day at US $ 41.44.
The Libyan National Petroleum Company (NOC) announced on Saturday the resumption of crude oil production and exports in Libya at “safe” sites.
This news came the day after the Marshal who controls the east of the country, Khalifa Haftar, announced the lifting, under conditions, of the eight-month blockade imposed by his forces.
Grain
The futures of soybeans, wheat and corn collapsed this Monday in the Chicago Market, due to sales of investment funds in this context of risk aversion by the new wave of infections.
Despite sustained demand from China, soybeans suffered a loss of more than 2%, their biggest daily decline since April 1. It should be remembered that the strong demand from the Asian giant took the oilseed to its highest level in more than two years last week.
In the meantime, Wheat decreased 3.5% (US $ 7.44) and closed at US $ 203.84 per ton, in what was its largest daily percentage drop since August 2019.
Argentine assets
Amid this scenario, the S&P stock index Merval de Bolsas y Mercados Argentinos (BYMA) began on Monday with a drop of 4% but then attenuated falls to 1.8% due to the rise of the CCL dollar, which touched $ 140 and brought the exchange gap with the official dollar to 85 %, which reflects that the expectations of devaluation of the peso are still latent.
In the fixed income segment, the new bonds they closed with losses of up to 3.3%, as reflected by the decline in Bonar 2035. Sovereign bonds accumulated a loss of up to 13% last week.
In New York, the falls were more pronounced, something that was reflected in Argentine country risk, which rose 6.4% to 1,348 basis points, compared to the 1,083 basis points recorded on September 10 after reconfiguring with the new bonds.
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