Bloomberg
Published Jan 27, 2020 05:40AM ET
Updated Jan 27, 2020 09:40AM ET
‘Fear is The Name of The Game’: Investors Dump Airlines, Miners
(Bloomberg) -- After surging to a fresh record high at the end of last week, European equities on Monday became the latest market to get hammered by fears that measures to slow the spread of the coronavirus were failing, sending investors running from risky assets.
The Stoxx Europe 600 Index tumbled about 2%, with miners, airlines, luxury-goods makers and tech stocks taking a serious beating. All industry groups were in the red, signaling just how worried traders are.
“Fear is the name of the game,” said Stephane Ekolo, an equity strategist at TFS Derivatives in London. “Market participants are taking some risks off the table as they are afraid of the potential economic implication of the virus outbreak.”
Today’s drop is quite a change from Friday, when the market rallied on optimism that China was moving quickly enough to contain the outbreak. The death toll has now risen to at least 80 people, the infection is spreading around the world, and investors are dumping equities at the start of a week jam-packed with earnings.
“A spike in volatility will add further excuses to sell and to adjust the weight into the end of the month,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano. “We are therefore continuing to buy puts on main European and U.S. indexes in order to protect the portfolios.”
The Euro Stoxx 50 Volatility Index jumped 25% to the highest level since Jan. 6, signaling that traders were unsettled by the rising number of victims from the outbreak. The gauge had dropped to a record low earlier this month.
While Monday’s pull-back in stocks was pronounced, all was not lost yet. Technical charts showed the Stoxx 600 remained in an uptrend channel, and trading above its 50-day moving average.
Meanwhile, Italian banks managed to buck the trend, gaining ground along with the country’s bonds as after Matteo Salvini, leader of the anti-immigrant League party, suffered a defeat in a key regional vote.
Here are the most affected sectors in today’s sell-off:
Luxury-goods makers
Written By: Bloomberg
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