Europe closes the worst session of the year due to concerns about the South African strain

As the contagions of the new variant coronavirus ?? first identified in South Africa ?? have been on the rise, concern around the globe has gone hand in hand. In Europe, already on the eve of Christmas, Austria has already announced its fourth confinement to bend its contagion curve while other countries on the Old Continent, such as Germany, have a soaring incidence.

The uncertainty is evident. To prevent the outlook from getting worse, the European Union approved this Friday “to activate the emergency brake” to stop air traffic of the eurozone with the regions where this new strain is unleashed: South Africa, Botswana and Hong Kong.

The reactions have not been made to beg. The announcement has caused panic in the markets that have collapsed at the possibility of returning to mobility restrictions and the fall of the consumption, production and trade international. Although it was a one-off drop, this Friday was the worst day for European markets so far in 2021.

The German Dax gave up 4.15% last Friday with what dismissed the week at 15,257 points, cutting 5.59% in five days. The same fate has suffered the rest of the main indices such as the EuroStoxx and the French Cac, losing 6.13% and 5.24% since Monday, respectively. The European index has lived her worst session since March 2020. With the figures of the last days, the weakness of the European stock markets makes it difficult to attend a rally at the end of the year. For the analyst of Ecotrader, Joan Cabrero, the reference stood at 15,690 / 15,730 points of the German Dax since, below that figure, there will hardly be any chance of closing the year with optimism for investors.

The Spanish selective, which was already unmarked and far behind the evolution of the rest of the European stock exchanges in the year, has once again been one of the indexes of the Old Continent most punished. Since Monday, the Ibex 35 has yielded 4%, weighed mainly by the companies focused on tourism.

The red was the protagonist of the last day with only three values ​​in green. By standing at the market close at 8,402.7 points, the selective has lost the support that Cabrero established as a reference when marking “where the upward guideline that arises from joining the minimums of the last downward corrections ran.” For this reason, the Ecotrader expert points out that “by losing that level, one can think of a relapse in search of support for supports such as 8,550 points and even 8,250”.

Within the Ibex, IAG took the worst hit by conceding a fall of 15.59% during the trading session on Friday. The company expected to reach 60% of the air traffic it registered in 2019 in the fourth quarter, prior to the cancellations caused by the coronavirus. Once again, companies linked to tourism have suffered the greatest corrections, such as Meliá Hotels, which dropped 7.7%; Aena, 8.77%; o Amadeus, 7.5%. But there were also big sales in the bank. The Santander has lost 8.9% and BBVA has cut 7.3%.

In search of refuge

Although these sudden drops have occurred, the analysts consulted considered that we will have to wait to have more details about the vaccine effectiveness on this new variant of coronavirus before talking about a long-term stock market crash.

However, there are investors who have turned to the debt market in search of a refuge for their money, as reflected in the 25% drop in profitability of the German bond, while the risk premium in Spain stood at 76 points. Another example is the rise that the price of gold has experienced with an ounce above 1,800 euros.

The maneuver of the United States to release part of its reserve of barrels of oil to control inflation and its dispute with OPEC, which does not consider a change in the levels of oil pumping, have been diluted in the falls in the futures of the past Friday. Fewer displacements due to the pandemic restrictions would imply a reduction in global demand made out of fuel. With the announcement of possible movement restrictions, such as those confirmed by eight European countries with South Africa, crude prices suffer by around 10%, with a barrel of Brent at 72 euros.