Friday, November 26th, 2021
“Black Friday” for the Dax
Fear is returning with the new Corona variant
Fear of new global lockdowns due to a new coronavirus variant discovered in South Africa is driving investors to flight in droves. Some states are already restricting freedom of travel or are about to do so. Lufthansa stocks react with a price drop of up to 16 percent.
“Black Friday” becomes Black Friday for the stock exchanges. There is a sell-out mood. For fear of a new dangerous virus variant, the Dax and EuroStoxx50 collapse as much as they did during the stock market crash in March 2020, when the first wave of pandemics fueled fears of recession.
The Dax fell in early trading by up to four percent to 15,283 points and in the morning was still 2.9 percent in the red. The EuroStoxx50 lost up to 4.6 percent on 4098 meters. “Black Friday seems to go hand in hand with price discounts on the stock exchange,” commented analyst Jochen Stanzl from the online broker CMC Markets. At the moment, nobody knows whether stocks will be cheap again.
Stock marketers are concerned about the new coronavirus variant discovered in South Africa, which is fueling fears of new lockdowns and economic downturns. According to experts, the variant could be even more contagious than the currently rampant Delta type and more resistant to the previous vaccines.
“If the new variant turns out to be very aggressive, this could go hand in hand with the closure of international air traffic, as with the first Corona wave,” warned investment strategist Jürgen Molnar from the brokerage firm RoboMarkets. Some states are already restricting freedom of travel or are about to do so.
The UK and Israel have already temporarily stopped flights from South Africa and some neighboring countries. Two cases were also reported from Hong Kong (a traveler from South Africa and a guest who lived on the same floor of a hotel). The World Health Organization (WHO) could now classify the disease as a “worrying variant”.
Against this background, the index of European travel and tourism values collapsed by up to 7.3 percent. One of the biggest losers here was Lufthansa, which, with a loss of almost 16 percent at times, was heading towards the biggest daily loss in at least 30 years.
“New variant like a new virus”
“As long as one does not know anything about infection rates and vaccination protection, uncertainty rules on the stock exchange and it is sold,” comments analyst Jochen Stanzl from the online broker CMC Markets. “And a new variant that vaccines can’t control is like a new virus.”
The sell-off on the stock exchanges does not stop at crypto currencies either. Bitcoin and Ethereum fell 7.5 percent to $ 54,429 and 11 percent to $ 4006, respectively. “Investors turn their backs on riskier asset classes and play it safe,” says analyst Timo Emden from Emden Research.
Meanwhile, investors speculate on additional business in the event of a new lockdown with possible profiteers. The shares of the food suppliers Delivery Hero, Just Eat Takeaway and Deliveroo gain up to two percent. The papers from the Kochbox mail order company Hellofresh have increased by almost three percent. The online retailer Zalando and the computer games provider Ubisoft advanced one and two percent respectively.
“Safe havens” like gold are also in demand again. The precious metal gained one percent to $ 1806 a troy ounce (31.1 grams). “If the new variant spreads in the US, it would dampen growth there,” said Stephen Innes, partner at wealth management company SPI. In such an environment, a rate hike by the Fed would become less likely. The same applies to the euro zone.
At this point in time, it is still too early to assess the possible economic consequences, comments Holger Schmieding from Berenberg Bank. “Any new wave could cause serious economic damage. A potentially mitigating factor is that the world is now on high alert and has increased its capacity to develop, adapt and manufacture vaccines.”
Since Wall Street only opens for shortened trading after the US Thanksgiving Day and many investors take the opportunity for a long weekend, stockbrokers expect similarly thin sales in Europe as on Thursday. This could intensify price fluctuations.
The MDax of the medium-sized values also fell sharply in the morning, but recovered slightly in the course of morning trading and was recently 2.2 percent lighter at 34,272 points. In the early morning, the new virus mutation had already spoiled the last trading day of the week in Asia and caused in some cases high price losses.
Timid attempt at recovery on Thanksgiving
Yesterday’s trading day was still positive. The day before, investors had cautiously groped back after the price losses this week. Dax and EuroStoxx50 each gained almost half a percent on Thursday to 15,971 and 4,293 points, respectively. “We continue to view setbacks as an opportunity to get started,” commented investment strategist Marija Veitmane of wealth manager State Street.
A small ray of hope was the approval of Biontech’s coronavirus vaccine for children between the ages of five and eleven by the European Medicines Agency (EMA). Once the current wave of infections has broken, the attempt by the new federal government to dare to make more progress could lighten the mood of investors, CMC expert Stanzl predicted.
That is why Commerzbank is also exuding confidence for the coming year in its new forecast. “2022 will be another good year for stocks,” says chief economist Jörg Krämer when the bank looks to the economy and stock markets. The bank sees the Dax at 17,200 points at the end of the year. That would be an increase on the current level of around 11 percent. Krämer justifies his optimism primarily with the expectation of falling inflation in the coming year.
Commerzbank has included new virus variants. “But they will have fewer effects from wave to wave,” believes Krämer. However, the bank is clearly less optimistic about the economy. Because of the expected further waves, Commerzbank is less optimistic than other houses. She expects growth of 3 percent.