Delta, oil, inflation: the three anxieties that sink the stock markets

Delta, oil, inflation: the three anxieties that sink the stock markets
Delta, oil, inflation: the three anxieties that sink the stock markets

Curfew, restrictions, early closures, contagions rising almost everywhere. With the calendar that seems to have plunged back a few months in the middle of the second wave, the markets are also starting to discount that fear that bears the name of the Delta variant. It was a Monday marked in red that just ended in all European markets and, while the negotiations are still in progress, even the American lists do not seem to be an exception. The stock exchanges of the Old Continent burned 240 billion in capitalization in a single session. This is in fact the “virtual” loss based on the calculation of capitalization triggered by fears for the Delta variant of Covid-19. Paris lost 2.54% to 6,295 points, London 2.34% to 6,844 points, Frankfurt 2.62% to 15,133 points and Madrid 2.4% to 8,301 points. But the black jersey went to Milan which lost 3.34%, dropping below 24 thousand points (23.965 points). “Does the delta variant sink the stock markets? And I believe it. If instead of scientific data there is unfounded alarmism, it is not the good of Italy and Europe ”, commented the leader of the League, Matteo Salvini. “Is the Delta variant more contagious? – he added – Yes. Right now it causes more deaths and hospitalizations? No”.

Alarmism or not, the risk of a return of the restrictions is no longer just a distant hypothesis but a concrete one, and in some cases it has already become a reality. The stop to music and nightlife in its capital par excellence, the Greek island of Mykonos, was just a taste. The curfew has also taken place in various regions of Catalonia, in Spain, and above all in its capital, Barcelona, ​​but it cannot be excluded that sooner or later, if the infections do not reverse the curve and indeed accentuate it, the limitations and closures will return to face overwhelmingly on different regions of the Old Continent. In France, the undersecretary for European affairs of the government Clement Beaune admitted that a return of the curfew “is a possibility and cannot be excluded”. And in the Netherlands, Prime Minister Mark Rutte has asked citizens to return to work from home in the face of soaring infection rates.

In the same way, the fear of incurring restrictions even in the presence of green passes, as is happening in many holiday resorts to travelers stuck in the structures dedicated to quarantine, makes them fear the worst for the tourism sector and that of air flights when everyone they considered that of the relaunch. It is therefore no coincidence that the stocks of airlines and shipping companies, such as American Airlines (-3.82%), Delta (-4.11%), Carnival and Norwegian (-4% approximately), have been dragged down.

The Delta variant on the other hand is advancing everywhere, including the United States where new cases of Covid have increased by 140% in the past two weeks, particularly affecting the states with the lowest percentage of vaccinated, and only two weeks after the Independence Day which should have sanctioned the ‘liberation from the virus’. The return to the normality that the vaccination campaign was foreshadowing is therefore to be postponed indefinitely and this is demonstrated by the invitation of the highest US health authority to American citizens not to go to Great Britain where, despite the infections have returned to grow, the Government has not desisted from removing the latest containment measures. “We must accept that self-isolation is part of life in the time of Covid,” British Prime Minister Boris Johnson said on ‘freedom day’. “But we must ask ourselves, if not now when?” Said the premier reiterating his line on reopening and the stop to limitations.

But in addition to the Delta variant, other factors also had an impact on the strong sales recorded on the price lists. First of all, oil, which saw its price fall heavily below $ 70 per barrel after the agreement reached within OPEC + for a gradual increase in production. The prices of Brent and WTI have discounted the increase in supply which, according to the terms of the agreement reached once the risk of a price war has been averted, will increase by 400 thousand barrels a day starting from August until September 2022. However, doubts about the stability of global crude oil demand remain, fueled by fears for a return of the virus containment measures. The WTI with delivery in August lost 6% to 67.3 dollars a barrel, the Brent in September fell to 69.6 dollars (-5.4%), hitting both lows in a month and a half.

Then there is the fear, now constant among investors, of an inflationary spiral that nevertheless divides the world of analysts. Once again the White House has reiterated that price growth “is a temporary and expected phenomenon. Our experts, comforted by the data, believe that most of the price increases we have seen were expected and should be temporary, ”Biden said. Words that come after the June data from the Department of Labor recorded a consumer price index up 5.4 percent compared to a year ago, the highest increase recorded since August 2008. “The reality is that you can’t turn the global economy upside down and not expect something like this to happen. With the return of demand, there are inevitably problems in the global supply chain, ”Biden said. Much will depend on overcoming the problems that still persist along the supply chains, literally sent haywire by the pandemic and not yet returned to normal.

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