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Fear of a new harsh lockdown in Europe scares off investors

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Fear in the market for the possibility of a new hard confinement in Europe. President Emmanuel macron could announce new restrictive measures this afternoon in France, including a possible new home confinement for a month from Thursday.

"Although less stringent than the lockdown of the first wave in March-April, the economic impact would be especially negative in the service sector, delving into its weakness ", say the Renta 4 analysts.

Furthermore, the German Chancellor, Angela Merkel, will meet with the regional governments with the aim of applying a "light confinement" that includes the closure of restaurants and bars and the prohibition of public meetings.

"He strong increase in Covid-19 cases in Europe and the US and investors' fear that announcements of restrictions on mobility and economic activity being made by different governments and local authorities negatively impact the economic recovery risk assets, especially equities, are again taking their toll ", argue the analysts of Link Securities.

For its part, Bankinter highlights that "the increase in infections and lack of agreement for the second fiscal package in the US weighed down the session in Wall street"and provokes downward pressure on American futures, which are down more than 1%.

For its experts, the expectation of "weakening of the stock markets that we have defended would happen just before the American elections" is fulfilled; and what is "more evident in Europe by contagions and, especially, in Spain, where the fundamentals and the response are weaker. "

"With the volatility at highs of the last four months (VIX 33.35)In the absence of catalysts, we will continue in wait-and-see mode, with some added tension due to the global failure to control contagion, which threatens the continuity of the economic recovery ", conclude these analysts.

In Spain, Pedro Sanchez has offered this Wednesday to the Popular Party that the alarm status lasts four months and that the next March 9 it is the Interterritorial Health Council that "reviews" whether or not it should continue.

Furthermore, Catalonia is studying applying a total confinement such as March and April, which would imply the closure of schools, despite the fact that the incidence in educational centers is not as high as in the rest of the community.

"We do not expect stocks to change trend in the short term"adds Link Securities," at least until the epidemiological situation in the countries most affected by the virus shows signs of improvement. "Thus, both the Ibex, like the rest of European stock markets, register sharp falls, in a day full of business results but in which investors sell, frightened by the fear of a new harsh confinement at the European level.

Measures to stop the pandemic "negatively impact economic growthTherefore, we expect significant downward revisions to growth expectations, both by the main international organizations and by the analysis houses and the governments themselves, "they conclude from Link. And this is how the stock markets are discounting it, along with other assets, such as oil price, which fell 2.7% in the case of Barrel Brent, up to $ 40.

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