A simple push of a button and there was light…What seems so easy and obvious today was something of a miracle 139 years ago, when, on the 21st of October 1879, Thomas Edison successfully tested his electric incandescent lamp. It was neither the first electric light nor the first light bulb, but a great improvement on an existing idea that led to the first commercially practical light. This marked the beginning of the Electric Era, turning darkness into light.
But last week in the markets, darkness seemed to prevail, the remaining lights being the red lights signalling the heavy losses suffered by equities across the board. Despite a relatively solid start to earnings season in the US – a third of the companies already reported their results, the majority of these beating analysts’ forecasts - several elements contributed towards an anxious mood this week.
The rejection by the European Commission of Italy’s proposed budget – a first in the history of the European Union - added tensions to markets already unsettled by ongoing worries about the slowing Chinese economy. With the ongoing trade war with the US, concerns over growth prospects in China have been further amplified by official data reporting that economic growth slowed to 6.5 % in the third quarter of 2018, its weakest pace since 2009. Additionally, despite the “weaker momentum” of the Eurozone economy, the ECB confirmed on Thursday its plan to halt its quantitative easing programme by the end of this year.
In this context, global equities suffered heavy falls and European stocks sank to a nearly two year low. While the FTSE All-World equity index hit its lowest level since August 2017, the Stoxx 50 tumbled 2.9% over the week, amounting to a 7.6% loss since the beginning of the month. The insurance sector was no exception in the sell-off, and Ageas’ share declined 3.8% over the week. However, since the beginning of the year, Ageas’ share is still up 5.7%, strongly outperforming both the Stoxx 50 (-11.0%) and the Stoxx Insurance index (-7.1%).
Lastly, in China, the blue-chip CSI 300 index, rebounded 4.3% on Monday, its biggest daily jump in 3 years, following coordinated statements of support by senior regulators and the announcement of planned tax cuts. However, the CSI 300 index remains 21% down this year, and 7.7% down since the beginning of the month.