The stock markets of almost the whole world have been dyed red this Monday in the face of the advance of infections by the delta variant and the uncertainty about how this will affect the economic recovery, which was already just around the corner in rich countries. From Brazil to Germany, through Japan and New York, the trading floors have suffered sharp falls not seen for months. The Eurotoxx 50, which groups the 50 largest listed companies in the euro area, has fallen by 2.7%, its biggest drop so far this year, while in Spain, the Ibex 35 has fallen by 2.4 % of its value, its worst day in three months.
“Before the Delta variant began to gain ground, a very strong recovery was expected,” says David Grecsek, executive of Aspiriant, in statements collected by Reuters. “But what we are seeing today is that the market is going to react to any data or news that is going to alter that type of serene scenario, with low volatility and high corporate profits.”
The sectors most affected by the possible return of restrictions is tourism, which expected to get some air this summer. In Spain, the airline IAG, owner of British Airways and Iberia, has been the most affected company of the Ibex 35 and has fallen more than 5.5% this Monday. The rest of tourism companies have also fallen between 3% and 4%: Aena, the reservation manager Amadeus and the hotel company Meliá. Also on the Ibex, the five banks in the index and large industrial groups such as Ferrovial, ArcelorMitall, Indra, ACS and Acerinox have plummeted between 3% and 4%. On the other hand, in positive territory, only three values have closed in positive; Almirall (+ 1.36%), Pharma Mar (+ 1.01%) and Siemens Gamesa (+ 0.85%).
“The global economy is barely surviving on assisted breathing, and another wave of infections may trigger shutdowns that could signal the death sentence for a tenuous recovery,” said Peter Essele, head of investment management at Commonwealth Financial Network. For his part, Edward Moya, senior market analyst at Oanda, adds that this uncertainty is driving investors out of equities. “The aversion to risk is firm and the differential of the Delta variant is causing a flight to safety”, according to a note collected by Bloomberg.
In Europe, the day has been similar, with the French aircraft manufacturer Airbus leaving more than 6% of the value of its shares in just one day, the most punished value of the Eurostoxx 50. Among the large dependents of international mobility, also The EasyJet airline (-6.6%), the Royal Caribbean cruise ships, the Marriott hotel (-3%) or the car manufacturer BMW (-3.6%) have taken a hit. In the same line with the Ibex, the German DAX (-2.6%), the French CAC (-2.5%) and the London FTSE (-2.3%) have fallen, while that of Milan has fallen left 3.3%.
The price of oil has also sunk this Monday. International markets have exacerbated the expected drop in the price of a barrel after the agreement reached yesterday by the Organization of Petroleum Exporting Countries (OPEC), which signed to extend crude production, increasing supply for the coming months. Consequently, the futures price of a barrel brent, a benchmark in Europe, has plummeted more than 6% this day. In this context, the Spanish oil company Repsol has left more than 4% in the Ibex 35, as well as the British BP and the Dutch Shell.
On the other side of the Atlantic, three hours after the opening of the markets, the evolution was similar. In the US, the number of infections has grown by 70% in the last week and financial firms are already beginning to anticipate the consequences: the Bank of America has cut half a point, to 6.5%, the forecast for the evolution of US GDP this year.
The S&P 500, the main stock market in the United States, fell 2% in the middle of the afternoon (Spanish time). Something else was left by the industrial Dow Jones (-2.5%), while the technological Nasdaq fell by 1.4%. “There is concern among investors that the delta variant of the virus will return the counters to zero in the progress that has been made with the covid-19 and the economic recovery”, has analyzed Andre Bakhos, managing director of the investment firm New VInes Capital, speaking to Reuters.
The S&P 500 broke its three-week winning streak on Friday. This Monday the indices fell in all the sectors that this selective contemplates, including declines of between 2.5% and 4.4% for financial, industrial, materials and energy stocks. The Dow Jones, for its part, has fallen by 2.61% at some points of the day, on the way to its worst day since last October. And even the relative better performance of the Nasdaq, where technological stocks are grouped, is explained by the new fear of a worsening of the pandemic, to the extent that this index already showed last year to be more resistant to the contraction of consumption caused by lockdowns and travel restrictions.