Yesterday Monday, the markets collapsed to June 2016 levels with the Brexit referendum. And today, after some doubts at the beginning of the session, red is again imposed on the bags.
“On the day of collective hysteria we had yesterday, it is very clear that the unprecedented informational bombardment of the virus seems very evident to us that influenced, and is influencing, collective psychology, increasing fear of what might happen through the virus” , explains José Luis Cárpatos, CEO of Serenity Markets.
“The VIX rose 47% yesterday, so we must expect huge blows in any direction from now on. It is a very difficult market and in which we can lose even the shirt if we get into adventures, ”adds this expert.
The markets are, according to Link Securities, “very conditioned to any new headline on the progress of the disease in a new country. As we indicated in his day, it would not be a bad idea to continue covering some positions, taking advantage of specific rebounds, as well as making a list of the values that we like the most to take advantage of the declines, once the crisis is over, which will be overcome, to take positions in them ”.
In that sense, these analysts point out that, “in an environment of historically low rates, which we understand will last a long time, the values of high dividends, acting in regulated markets and that do not have direct exposure to the economic cycle can offer a good Opportunity for entry if the indiscriminate punishment of Western stock markets continues. ”
From the same opinion are the experts of Renta 4 (MC: RTA4): “We understand that volatility and possible taking of additional benefits could be maintained in the short term until there is more evidence of containment of the coronavirus, and with this containment you can more accurately assess the economic impact of the crisis. Even so, we believe that interesting investment opportunities are emerging with a medium-term vision. ”
Other experts highlight how central banks also closely follow every new story that we know about the expansion of the coronavirus. Federal Reserve fund rate futures indicate a 50% probability that there will be an interest rate cut at a quarter point in early April. In total, they point to more than 50 basis points for reductions by the end of the year.
“The statements of Lael Brainard, a member of the Fed, who said that the agency intends to take rate control measures through interventions in American bonds, modifying the curve to convenience,” commented in Renta Markets.
We remember that, in addition, yesterday the chances of the European Central Bank (ECB) cutting rates rose to 50%, when a week ago the probability was 35%. This decline would come in July.