Investam-HK: Coronavirus Effect: US Stock market worst fall since 1987

As the Government all over the world battles with an invincible enemy known as ‘coronavirus or Covid–19’… as the panic and fear grow bigger than smaller because of its pandemic effect, Global stock markets continues to plunge even with the help of their countries government to solve and ease the headwinds events on the economy.

Right after U.S. President Donald Trump said in an interview that the economy may be heading for a recession; The Dow Jones index closed 12.9%.

Just last Sunday, the U.S. Federal Reserve cut once more its interest rates to a near zero percent and they are also introducing a massive program where it would buy Treasury debt and mortgage-backed securities at a rate of $500 billion and $200 billion respectively.

According to them this move is to help mitigate the U.S. Economy by ensuring money markets operate smoothly.
European markets are still sliding after massive lockdown in most of their areas took effect, notably seen is London’s FTSE 100 which ended 4% down. It was part of co-ordinated action announced alongside the Eurozone, together with UK, Japan, Canada, and Switzerland. In London, firms in the travel sector saw big falls. Share in holiday firm Tui sank more than 27% after it said it would suspend the “majority” of its operations. BA-owner IAG fell more than 25% after it said it would cut its flight capacity by at least 75% in April and May.

Most investors fear that central banks all around the world have fewer options left to fight the rapid impact cause of the coronavirus spread.

Andrew Bailey, Bank of England’s new governor has pledged to take “prompt action again” if and when it is necessary so to stop the damage the economy had been facing for the past months.

A market analyst at CMC Markets, David Madden, said that while central bankers were trying to calm the markets, “in reality it is having the opposite effect”.

He added, “The radical measures have sent out a very worrying message to dealers, and that is why they are blindly dumping stocks.”

Automatic halt in trading has cause panic selling in New York, halts known as circuit breakers, had not been used in more than two decades. Due to this the sell-off continues and for about 15-minute suspension, the Dow loss nearly 3,000 points or 12.9%, its worst percentage drop since 1987, S&P 500 dropped 11.9%, and Nasdaq also dropped 12.3%. Which makes the three indexes are now down more than 25% from their last highs.

Even oil prices are not exempted on this continues downfall of the market. Because of the price war with the exporters, oil prices per barrel fell again. Brent crude plummet by more than 10% to less than $32 a barrel while West Texas International crude fell more than 8% to less than $30 a barrel.
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