The further cut in rates by the US Fed and the announcement of concerted action by central banks were not enough to reassure investors about the economic impact of the Covid-19. The main European stock markets opened falling more than 5% on Monday, while they continued to dive in Asia. Wall Street is also continuing to plummet.
Record fall in Australia, further stock market declines in Asia and Europe, Wall Street continuing its plunge … Panic continued to seize the financial markets, Monday March 16, despite the efforts of central banks to lessen the impact cost of coronavirus.
The New York Stock Exchange continues to tumble Monday after the resumption of trade, interrupted shortly after opening. Its flagship index, the Dow Jones Industrial Average, slumped around 2 p.m. GMT by 9.51% to 20,981.67 points, after losing up to 12%. It is evolving at its lowest level since May 2017.
The highly technological Nasdaq plunged 9.37% to 7,134.45 points, and the widened S&P 500 index fell 9.28% to 2,459.33 points. The collapse of the S&P 500 of 7% had automatically triggered, just after the start of the session, a quarter-hour trade interruption mechanism, supposed to allow market players to regain their senses.
This mechanism was already used twice last week.
If the index representing the 500 largest companies on Wall Street dropped 13%, a second stop of the same duration would take place. If he lost 20%, the session would be suspended.
Markets face extreme volatility since the start of the coronavirus crisis, which worsened last week between the worst fall in the Dow Jones since 1987 Thursday (-10%), and its largest rise since 2008 Friday (+ 9.4%).
The explosion of the number of cases of contaminations in the world and the drastic containment measures imposed almost everywhere panic investors, who fear a global economic recession.
Dax under 9,000 points for the first time since 2016
In Europe, the Paris Stock Exchange plunged again at the opening Monday (-5.62%). At 9 a.m. (8 a.m. GMT), the CAC 40 index fell from 231.54 points to 3,886.82 points. Friday, he had finished a cataclysmic week, where he lost 20.03%, by a meager technical rebound (+1.83%).
In Germany, the Dax, on the Frankfurt Stock Exchange, destabilized by the coronavirus pandemic, fell 5% in the first exchanges Monday, plunging under 9,000 points for the first time since 2016. Around 8:15 am GMT, The flagship index fell 465.13 points (-5.04%) to 8¨766.95 points, bringing losses of almost 34% since the start of the year. The MDax of the average values was down 4.37% to 19,371.34 points.
On the London Stock Exchange, the FTSE-100 index of major stocks tumbled 5.78% to 5,056.03 points at 8:21 am GMT. “The Fed is panicking, the markets are tumbling again,” said Neil Wilson, analyst at markets.com.
The explosion in the number of cases of contamination in the world, particularly in Europe, paralyzes the financial centers, which are worried about the economic brake in progress in several countries, and makes fear a world recession.
After the records of decline registered last week by several European places, the Australian Stock Exchange opened the week with an unprecedented fall of 9.7%, the ASX 200 index ending at 5,002.00 points.
“The latest announcements from central banks have failed to restore investor confidence,” commented brokerage CommSec in Sydney.
The American Central Bank decided to lower its rates to zero on Sunday, in the hope of reassuring the markets. At the same time, the Fed was participating in concerted action to ensure that the world did not run out of dollars on Monday.
But these announcements were not enough to reassure.
Tokyo Stock Exchange Unscrews, Shanghai Stock Exchange Ends Down 3.4%
The Tokyo Stock Exchange closed sharply down 2.46%, despite other measures announced urgently by the Bank of Japan.
The bank has significantly increased its annual targets for some of its asset purchases. Its annual target for redemptions of funds traded on the stock market was thus doubled to 12 trillion yen (101 billion euros).
In China, the Shanghai Stock Exchange ended down 3.4% to 2,789.25 points and that of Shenzhen down 4.83% to 1,712.02 points.
About an hour from the close, Hong Kong lost more than 4%.
The statistics of the day proved to be much worse than expected for the second world economy, paralyzed by the fight against the epidemic.
In the first two months of the year, Chinese industrial production contracted for the first time in almost 30 years (-13.5%), while retail sales plummeted (-20.5 %).
Analysts polled by the financial agency Bloomberg expected decreases of only 3% and 4% respectively.
The Chinese Central Bank, however, lowered Monday the reserve requirement of banks, injecting 550 billion yuan (70.6 billion euros) to support the economy.
But that is not enough to support the rating, because “the coronavirus continues to spread across the planet and the demand for consumer goods is declining,” observes broker Guangzhou Wanlong Securities.
Wall Street could open sharply lower Monday, if we believe the indications of futures, which often foreshadow the mood at the start of the official session.
On the foreign exchange market, the euro rose against the dollar to 1.1139 dollars against 1.1088 Friday at 19h GMT.
Oil prices continued to fall: US barrels of West Texas Intermediate (WTI) were trading at $ 30.62 per barrel around 7:00 GMT, down 3.40% from Friday’s close.
A barrel of Brent from the North Sea yielded 5.11% to 32.12 dollars a barrel.