Black Monday offered volley upon volley of bad news for investors, with the worst dip in global equities since the financial crash, and the biggest Dow Jones dip in its century-and-a-half-long history.
With Brent Crude diving by a third and the Dow shedding 2,000 points after the open, Monday offered little in the way of good news. Several bluechip equities shed 10-20% of their share price value, and the commodity-laden FTSE had a day to forget.
As markets opened on Tuesday, there was room for some insipid green across indexes, with opportunists looking to snatch up the bargains offered by Monday’s casualties.
The positive start was bolstered by a slight recovery in oil prices, and promises of economic stimulus from Donald Trump, though the longevity of the positive start will likely be dependent on how the Dow chooses to open during the Tuesday session.
Speaking on the recovery of equities after Black Monday, Spreadex Financial Analyst Connor Campbell stated,
“There were a couple of things behind Europe’s green start. Firstly, a fall as great as that seen on Monday is always going to attract a few vultures, swooping in to pick at the market’s bloody carcass – remember, the global indices are now heavily discounted from the all-time highs struck just a month ago.”
“Then there was Donald Trump, attempting to gee-up investors by suggesting he was preparing a ‘major’ economic relief package in the US, one that would potentially include a payroll tax cut and provisions to protect hourly workers. This likely gave further justification at those looking to enter the market at a potential bargain price.”
“At the same time Italy is now in complete lockdown, with internal travel restrictions stretching far beyond the initially quarantined northern part of the country. A serious reaction to a serious situation, which is good. But boy will it be costly.”
“Buoyed by a 6.4% jump from Brent Crude, which in turn helped out the battered BP (LON:BP) and Shell (LON:RDSB), the FTSE was Europe’s best performer, adding 100 points to graze 6100. The CAC, meanwhile, rose 1.2% as it tried to reclaim 4800, with the DAX crossing 10800 as it added 1.2%.”
“Crucial to the longevity of [the European equities recovery] will be the US open. Currently the Dow Jones is set to take back around 800 points when things get underway on Wall Street, a rise that would just about push it to 24600. For context, that’s around 1000 points off of Monday’s lows.”