What is the Reason for the Sharp Drop of the “BlueChip” stocks?
One of the top indices in the world, Dax, lost 1400 points in the last week of trading. The reason for the price fall on the exchange, according to analysts, is the coronavirus, which continues to scare Europe. Italy unexpectedly entered the “top 3” in terms of the number of infected, where at the time of writing this article, there were 2502 confirmed infected.
Today (04.03.2020), after the market opened, the Dax price managed to go up 160 points (almost 1.5%, 15:15 GMT). It is safe to say that this is not the best start for the index, after a rapid fall since February 26.
The panic before the global viral epidemic also shook the American Dow Jones index. Initially, there was hope for a slight drop of 600–700 points, after which some correction was noticeable. Now the index is traded at $25917, which is a big loss for investors. Especially if you remember that on February 26 its price was more than $29300. Dow Jones and S&P 500 are approaching the largest daily losses in the last two years.
The President of the United States, Donald Trump, said on February 26 that there was no cause for concern, and what we see now on the market is just a panic that will soon pass.
It is worth mentioning that such large companies as Tesla and Lufthansa (and in particular Wizz Air) lost since the beginning of the week about 14 and 20%, respectively. The price of Lufthansa fell below August 2019, to the lowest level in the last three years. After a successful start in the new year, Tesla’s stock price exceeded $900. But then it also showed a good tendency to fall, closing at around $667,99. Fortunately, despite all the intimidation, their stocks continue to go up. At the moment (04.03.2020, 16:30 GMT), their price is $751,51 per share.
Those who benefit from the virus are respiratory mask manufacturers and other biotech companies (such as Vir Biotechnology), whose shares have risen sharply on average by 3–5%. At the moment (04.03.2020, 14:40 GMT), stocks are traded at $43,28, which is a good result even after the correction.
