Financial markets collapsed completely on Monday. Scholarships collapsed throughout Europe. The effect of the deadly coronavirus on the economy is affecting investments worldwide, individuals and institutional investors trying to limit losses after major setbacks last week. Analysts speak of unprecedented price pressure also caused by a collapsed oil price.
In Asia, the Japanese Nikkei fell 6% on Monday. The Hangseng fell by another 4%.
The futures of the S&P 500 for opening this afternoon of stock exchanges in the United States, where the corona virus is always clearly affected, note a loss of around 5%. The Damrak also opens this morning with a substantial loss. Listed companies in the travel sector and aviation have been hit hard.
Investors once again moved money from shares to bonds. The yield, the effective yield for US government bonds considered safe, fell below 1% for all variants for the first time in history.
Japan’s economy experienced the sharpest contraction in five years. Annualized, the growth of the third economy fell by 7.1% as companies limit their investments quickly and drastically. Previously a shrinkage of 6.3% was assumed.
In Italy, the economy in the north has almost come to a halt, with 16 million Italians staying at home. Prime Minister Giuseppe Conte ignored calls not to open the stock exchange in Italy on Monday morning because of the expected losses after the number of deaths doubled this weekend and rose to 366 people.
Throughout Europe, governments have promised generous support packages to companies throughout the weekend. Italy reserved $ 8.5 billion. Germany reported investing another € 12.4 billion in its economy.
The number of deaths from the corona virus has risen to 3800. Officially, 108,000 people worldwide are infected. In the Netherlands, RIVM had 264 infections, three people died from the virus.
The losses were further exacerbated by the recently unprecedented fall in the oil price deployed by Saudi Arabia. Oil cartel OPEC did not reach an agreement with partner Russia on Friday about a fall in production to correct the fall in prices. Saudi Arabia then abandoned the old price agreements on the weekend and filled the market with oil. The price of Brent oil dropped 27% on Monday morning at $ 33.30 per barrel of 159 liters.
Goldman Sachs warned customers that the oil price could fall to around $ 20. ABN Amro anticipates $ 49 per barrel, compared to $ 58 for the weekend.
Investors waited Monday for the first signals of new measures from the European Central Bank, which would be announced as a package on Thursday. The Federal Reserve reports again next week, following a fall in its interest rates by 0.5% last week.
According to Bloomberg, the White House is today preparing a large package of support measures to limit the expanding coronavirus effect.
Once again, gold, usually an escape hill, was just 0.2% less on the futures market after rising to $ 1703.39 per troy ounce, 31.1 grams, the highest level since December 2012. According to market analysts, many investors who own gold are trying sell the precious metal, with the proceeds to limit losses in other investments.
American and Swiss investment banks have, however, drastically increased their expectations for the gold price. The Swiss UBS is expecting $ 1800 per troy ounce.