The so-called “stock market bloodbath” has continued on Friday with major indices falling down to the lows of the last October. What's going on?
European equities decline
On Tuesday, European equities found themselves in negative territory due to the fact that market participants started questioning whether the truce agreed by China and America on their trade clash would result in a long-term agreement.
Having enjoyed a leap for its first trading day, the most sensitive to China as well as trade war worries, Germany’s DAX went down by 0.6%.
The STOXX 600 went down by 0.3%.
The US-China trade negotiations appear to be the major driver for risk sentiment worldwide. They aren’t generally expected to be promising.
The European automotive sector SXAP that appears to be extremely sensitive to trade war worries was the top loser, diving by 1.7%.
As for the tech sector SXAP, it was also among big losers, sliding by 0.9%.
Chip manufacturers, heavily exposed to China and trade, suffered heavy losses. As a result, AMS declined by 4.7%, while Siltronic decreased by 3.8%.
Contributing to the poor market sentiment, on Monday, the yield curve between American three-year and five-year notes as well as between two-year and five-year flipped over. That’s the first such a case since the financial meltdown, excluding short-dated debt.
Market experts are currently afraid that an inversion of the two-year, ten-year yield curve could be inevitable, indicating a probable recession in the United States.
In addition to this, France's JCDecaux reported one of the worst individual dives, losing approximately 6%.
As for French catering group Elior, it declined by 7.3% having reduced its sales surge outlook. Besides this, Belgian postal services company Bpost went down by 20% following a profit warning.
Energy equities were among the few gainers because crude surged amid expected OPEC-led supply trims as well as a mandated reduction in Canadian output.
BP went up by 0.6%, while Royal Dutch Shell managed to ascend by 0.5%.
Besides coronavirus, other news has been driving the stocks of Apple, Wallmart and General Motors to the lower levels.
Will coronavirus continue keeping the markets in fear? What releases should we wait for? Find out in the news!
RBA Rate Statement is released on Tuesday at 07:30 MT time.
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