European Equities Crash To New Multi-Year Lows On Coronavirus Crisis
- DAX, FTSE and CAC have traded in double-digit losses today
- “There is nothing in the history of this data that can compare to this set of abysmal figures,” says a bank analyst
- Federal Reserve made another emergency rate cut last night to support the business activity amid the coronavirus outbreak
Germany’s main stock index DAX 30 trades around 10% lower today in another bloodbath for the European equities, while the UK’s FTSE 100 is having one of the worst days in its history. The Federal Reserve made additional cuts to further lower the rates and increase the liquidity, but without much success as stocks continued lower today as major indexes hit multi-year lows.
European stocks smashed
Another week and another equities bloodbath in Europe. All major European stock indexes are trading in red today as DAX 30 is 10% lower, while the FTSE 100 has slumped nearly 12%.
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“It’s becoming evident that the major central banks across the globe are using all their available tools to prevent a crisis, but it seems the fear of the pandemic is taking control of investors,” Hussein Sayed, chief market strategist at FXTM, a currency broker, told clients on Monday.
Elsewhere in Europe, French benchmark index CAC40 is also recording double-digit losses, while Spain’s IBEX35 trades 11.3% lower. Three major US indexes are also trading lower into the New York open, after hitting a limit down in premarket trading.
‘The issue for investors is that the virus’ economic impact is still not known – if this is a one-month event or a one-year event, and how deep the cutback in consumer spending is going to be,’ said Rick Meckler, a partner at Cherry Lane Investments.
The pan-European Stoxx 600 index is down more than 12%, trading at the levels as the ones last seen in 2012. Looking at sectors, travel and leisure stocks are expectedly leading losses, with some stocks trading as much as 30% lower today.
‘Everyone’s just looking at the measures taken in terms of limiting (social) activity, which is currently outweighing any stimulus. Even though they are providing as much liquidity as they can, we are currently seeing a supply shock that is hindering production,” said Bas van Geffen, an ECB analyst at Rabobank.
“And we’re seeing consumers less willing to spend or even, with shops being closed, they can’t spend”.
While many analysts had expected more losses this week as Europe is struggling to contain the coronavirus outbreak, double-digit losses in a single day are still a difficult sight to see for investors.
Over the weekend, Spain joined Italy on full lockdown as it has become the second hotspot for coronavirus in Europe. Elsewhere, Germany was forced to close its borders with Switzerland, Austria, and France to try to limit the quick spreading of the virus.
“There is nothing in the history of this data that can compare to this set of abysmal figures. Almost all the available resources have been pulled in to save lives and contain the spread of the coronavirus,” said Iris Pang at ING.
Below is an overview of important trading levels to consider in FTSE 100, DAX 30 and CAC 40.
FTSE 100 Index
For the first time since 2011, the FTSE 100 Index is trading below the 5,000 mark. This sentence sounds quite dramatic when you take into account that the index traded above 7,500 just a few weeks ago.
In order to see the real damage caused by the coronavirus outbreak globally, the FTSE100 index should be seen in a monthly chart. The index is on its way to post the biggest monthly loss in more than three decades.
Technically, the price action is now approaching the crucial level near the 4,800 mark. We can get here either today or tomorrow morning at this pace. Depending on the overall global situation and the latest death toll results from the UK and continental Europe, this level can provide a certain degree of support for the troubled bulls.
Dax 30 is down 25% on the month currently, just a month after printing a record high near the 14,000 mark. Today, the price has been trading around 10% lower as it closes on the crucial support around the 8,000 handle.
As seen in the chart above, the price action came close to testing the 8,000 support block today, which consists of the 200 monthly moving average – last time touched in 2011 – and the key horizontal support.
This zone is likely to attract significant buying interest as it is considered to be a multi-year support/resistance. Hence, a break of this level would open the door for much bigger losses, with 7,600 the next in line.
The French CAC 40 is also visiting multi-year lows. Today’s low of 3,632 was last traded in the summer of 2013. The index currently trades more than 26% lower in March, after losing nearly 9% in February.
The price action trades below both 100-MMA and 200-MMA, which is a very bearish environment. It has also today traded below the very important support block ranging from 3,750 to 3,950. A close below this block would further add to the overall bearish sentiment.
Hence, the price action needs to start recovering as soon as possible and trade above 4,000 to start with, before it can think about testing two moving averages near the 4,500 mark. The key 18-year supporting trend line trades just above the 3,000 handle, should we see another huge push lower.
Major European indexes are visiting multi-year lows today as the coronavirus-fueled market crash continues to weigh in on the stocks. Spain has joined Italy as Europe’s hotspot while Germany was forced to close almost all borders with its neighbours.
DAX 30, CAC 40 and FTSE 100 have all recorded double-digit losses at one point today, as investors scramble for the exit door.
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