Investors were in danger of throwing the baby out with the bathwater on Thursday afternoon, as was the rush to ditch equities.
Just as Wednesday’s US open helped drag Europe higher, today’s 900-point plunge from the Dow Jones sparked an acceleration in the session’s coronavirus carnage. The Dow is now trading at 26050 – astonishingly, around 3400 points off of where it was exactly one week ago. And that’s not a fat finger typo – three thousand four hundred points!
Percentage wise, however, the Dow’s 3.3% decline paled in comparison to the numbers posted by its European peers. The DAX lost 4.2%, sinking to a fresh 4-month-plus low of 12250. The CAC, meanwhile, was down 4.5% and at 5425 for the first time since the end of August 2019.
In terms of lows, the FTSE had all its US and Eurozone cousins beat. Unlike the Dow and DAX, the UK index didn’t inexplicably spend much of February touching all-time highs. Already, then, lagging behind, Thursday’s 4.3% plunge has sent the Footsie to 6750, a price last seen 13 months ago.
It makes sense – the UK bourse is pregnant with commodity stocks, all of which received an absolute hammering as the session went on. With Brent Crude down 4.3% to its own 13 month nadir, BP and Shell sank 4.8% and 4% respectively, while, in the case of Rio Tinto, the FTSE’s miners shed as much as 6.6%. Elsewhere, travel restrictions and a slowdown in business caused WPP to haemorrhage 17%, with airlines easyJet and IAG both shedding more than 12% for obvious reasons.
This is one of the worst weeks in recent memory – and terrifyingly, it’s not over yet. Friday is a tricky proposition. Will the vultures swoop in, picking over the market’s carcass in search of relative bargains? Or will the sheer momentum of Thursday’s losses turn tomorrow into another bloodbath? One way or the other, it’s hard to see any tangible good news appearing to generate a sustainable rebound.