Traders See ‘Flock of Black Swans’ on Worst Day for European Stocks

(Bloomberg) --

As European stocks experienced their worst day on record, equity market participants described “total capitulation,” black swan events and unseen levels of trading activity.

The Stoxx Europe 600 Index tumbled as much as 11% as the European Central Bank’s policy measures to counter the impact of the coronavirus disappointed investors and after U.S. restrictions on travel from Europe hit airlines and travel stocks. The gauge is now down 18% in a week that also included escalating concerns about the spread of the virus and an all-out oil price war.

“We are seeing a flock of black swans,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM EK. “You can’t stop a pandemic by printing money. We’re all in the same boat. It’s scary times.” Hernandez Sampere also said that brokers and clients seem nervous and insecure and noted that, unlike in 2008, the market’s problems can’t be fixed by monetary policy.

Activity on trading floors rivals that of the day after the Brexit referendum or the election of U.S. President Donald Trump, according to Alexandre Baradez, Chief Market Analyst at IG Index. “The difference is that this has been going on for two to three weeks now, this is unseen.”

Total Capitulation

The markets are seeing “total capitulation,” according to Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano, Switzerland. Meanwhile, Sylvain Goyon, head strategist at Oddo BHF, said that traders and clients “find it insane that entire countries are shutting down, and markets are still open.”

Still, the panic in markets may continue for a while longer as traders struggle to gauge a floor. “There’s no financial history book that can tell you how to behave in this situation,” said MPPM EK’s Hernandez Sampere.

--With assistance from Kit Rees and Jan-Patrick Barnert.

To contact the reporters on this story: Ksenia Galouchko in London at kgalouchko1@bloomberg.net;Michael Msika in London at mmsika4@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Beth Mellor

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