Equity markets: extreme volatility
The 19th of February seems a distant memory. On this date, the S&P500 and the Stoxx600 still reported new historic records. Hardly a month later, equity markets were at least 30% lower, the steepest drop ever in such a short period. At the end of the month, stock exchanges were able to recuperate a limited part of the losses, but the first quarter of 2020 closed as the worst since the fourth quarter of 2008 during the financial crisis. In March, the S&P500 reported both the steepest drop (-11.98% on 16 March) and the strongest rise (+9.4% on 24 March) on a daily basis in many decades. The containment measures will cause a global recession, now that the corona virus has spread across the world. The oil price crash after the collapse of the OPEC+ pact contributed to the deterioration of the stock market. 2020 was going to be the year of the recovery of corporate earnings, but investors are now bracing themselves for substantial losses, cancellations of dividend payments and the suspension of equity buyback schemes. Energy, airlines and tourism were the weakest performing sectors. Less negative were technology, pharmacy and consumer goods.