Coronavirus, oil prices forces sharp drop on Amsterdam stock exchange

With reporting by Janene Pieters.

A mass selling of stocks triggered by the increasing spread of coronavirus Covid-19 combined with sharply falling oil prices resulted in stock markets across Europe crashing on Monday morning. Amsterdam's AEX fell over 7.6 percent within the first 45 minutes of Monday's trading, compared to Friday's close, before a slight rebound.

Amsterdam's Index is comprised of 25 bluechip companies trading at Euronext Amsterdam. Royal Dutch Shell fell over 17 percent in the first 45 minutes of trading, ArcelorMittal lost 15 percent, ING lost 13 percent, Aegon fell by 12 percent, and ABN Amro lost shy of 11 percent by 10 a.m.

The rapid selling was likely to trigger an automatic momentary stoppage of trading for several businesses throughout the day, a spokesperson for Euronext Amsterdam told NL Times. Opening eight percent below the closing price was one scenario where a companies’ shares would be frozen for several minutes to give the market a chance to settle down. In some rarer circumstances, it was also possible for the entire AEX Index to be halted.

The Dutch financial markets authority AFM can decide to freeze or delay trading of the entire Amsterdam exchange if it finds the step necessary for a variety of reasons, including political or social unrest. The regulator maintains contact with Euronext and would first work discuss the any unusual situation with the exchange before coming to a decision, a spokesperson for AFM told NL Times.

This would only take place in the most atypical and exceptional circumstances, as shutting the entire market down could on its own cause heavier losses, the spokesperson said.

Globally, the oil price dropped by 25 percent after Saudi Arabia threatened to increase oil production. A barrel of Brent crude oil cost 34 dollars on Monday, compared to 68 dollars at the start of January.

Meanwhile, the coronavirus is spreading throughout more and more countries. Over the weekend, the Italian government decided to put 14 provinces under partial quarantine. Measures like these could trigger a global recession, Rabobank economists warned. 

Other stock exchanges in Europe and the rest of the world were also not immune to these developments. Frankfurt opened with a loss of 7.4 percent, London with 8.6 percent. The Japanese Nikkei index lost 5 percent, the South Korean Kospi over 4 percent.