“Black Monday” on the Athens Stock Exchange, nearly all of 2024’s gains wiped out – Sell-off in international markets

Uncontrollable “bleeding” in global markets, with Athens recording one of the largest percentage drops compared to other European stock exchanges. Most of this year’s gains were lost, with trading volume at high levels due to mass sell-offs.

In today’s session (5/8), characterized as “Black Monday” for the markets, the General Index plunged by 89.67 points or -6.27% and closed at 1,341.23 points, having moved between 1,320.77 (day’s low) and 1,428.01 points (day’s high). This marks the largest daily drop since February 24, 2022, when the GI lost -6.42% under the “weight” of liquidations caused by the Russian invasion of Ukraine.

Additionally, most of this year’s gains disappeared, leaving the Stock Exchange with only a +3.72% increase since the start of 2024. Specifically, it recorded a negative record of over 6 months, with the next lowest closing on January 19 (1,340.03 points).

Regarding the reasons behind today’s “dive” of the ASE, it is worth noting that because it is an emerging market, it tends to exaggerate in cases of overall market rise or fall. As brokerage office executives point out, July was good, and those who didn’t secure their profits last Friday (2/8) rushed to do so today. Additionally, many margins were “broken” in dozens of accounts, leading to reinforced sales and intensified pressures on the board.

On a larger scale, the shadow of a US recession has “blanketed” global markets following disappointing data on the American economy and employment. Investors are also worried about the Federal Reserve’s delay, with the extensive sell-off sending a strong message to the central bank about its tardiness in cutting interest rates. Monetary easing is expected to begin in September.

Technically, significant developments in Japan played a major role in today’s market downturn. The yen’s exchange rate strengthened abruptly after the BoJ raised its reference rate last week and decided to limit purchases of Japanese government bonds. This closed a very profitable carry trade between the yen and the dollar, destabilizing markets and triggering a wave of sell-offs. In this “carry trade,” investors borrowed cheaply in yen to make investments in dollars or euros. With the Bank of Japan belatedly raising its benchmark rate from 0.1% to 0.25%, disruptions were inevitable.

Eyes also remain on the geopolitical field, with the situation out of control in the Middle East, as Israel prepares for an attack from Iran and Hezbollah. The traders’ disorderly retreat has resulted in a shift towards safe havens such as government bonds, the Japanese yen, and the Swiss franc. Oil and base metals are on a downward trajectory, while cryptocurrencies are seeing violent liquidations, with bitcoin losing over -10% heading towards $50,000.

The Investors’ Agenda

This week’s agenda is full of announcements of half-year results, following the relevant disclosures from systemic banks last week. PPC starts on Tuesday (6/8), followed by OTE and Coca-Cola on Wednesday (7/8). On Thursday (8/8), Ideal Holdings and Petros Petropoulos AEBE are up, while the week ends on Friday (9/8) with BriQ Properties and Intercontinental International.

Next Monday (12/8), the verdict on the restructuring of MSCI indices in the context of the quarterly review (MSCI Quarterly Index Review) is expected. Titan is slightly ahead for an upgrade to the MSCI Greece Standard Index. Any changes, if made, will take effect on September 2 (effective date). Currently, the main index for Greek stocks includes the following 10: National Bank of Greece, Eurobank, Alpha Bank, Piraeus Bank, OTE, OPAP, PPC, Mytilineos, Jumbo, and Motor Oil.

Additionally, as announced last Friday, the ASE was included in the S&P DJI watchlist for a possible upgrade to developed markets in 2025. According to the related announcement, the rating agency emphasizes the need for Greece to complete the structural reforms introduced by the RRF, which are the basis of the significant progress of the Greek economy. Lastly, Alpha Real Estate Services is trading today without the right to a dividend of 0.26 euros per share.

Black Monday in International Markets

With a new sharp drop, Monday’s session started on Wall Street, with Nasdaq losses exceeding -3% and those of Dow Jones and S&P 500 surpassing -2.5%. The US stock market comes from consecutive “pounding” by sellers, with the S&P 500 registering its worst session in the last two years on Friday. The resurgence of recession fears has exerted intense pressure on technology, banking, and energy sectors. At the same time, weaker US employment data have sparked new concerns.

The sell-off is causing vertigo in European markets, with Stoxx 600 losses exceeding -2%. The pan-European index is trading at its lowest point since last February (6-month negative record). The British FTSE 100, Italian FTSE MIB, and Spanish IBEX 35 are down over -2%, while losses for other major European indices exceed -1%.

Selling panic in Asia, with stock markets in Japan and South Korea recording double-digit declines. The Nikkei in Tokyo plunged over 4,800 points or nearly -13.5%, erasing all of 2024’s gains, in its worst session since “Black Monday” of 1987. In Seoul, the Kospi slid by -8.8%, having earlier lost over -10%. Taiwan’s benchmark index fell more than -8%. The S&P/ASX 200 in Australia recorded a -3.7% loss.

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