Global stocks have plunged again despite
central banks around the world announcing a coordinated effort to ease the effects
of the new coronavirus.
The Dow Jones index closed 12.9% down after President Donald Trump said the
economy “may be” heading for recession.
Meanwhile, London’s FTSE 100 ended 4% lower, and other major European
markets saw similar slides.
On March 15, the Fed cut its interest rates by 100 basis points to a target
range of 0% to 0.25% and said it would offer at least $700 billion for support
to the markets in the coming weeks.
The move was part of coordinated action announced alongside the eurozone,
the UK, Japan, Canada, and Switzerland.
It comes as local officials across the US shut schools, restaurants and
bars, sports leagues cancel tournaments, and retailers such as Urban
Outfitters, Nike, and Gap announce hundreds of temporary store closures.
Speaking after the announcement, Fed chairman Jerome Powell said: “The virus is having a profound
effect.”
Investors are worried that central banks now have few options left to combat
the impact of the pandemic.
In New York, steep falls as markets opened triggered another automatic halt
to trading, which is meant to curb panic selling. Before last week, such halts,
known as circuit breakers, had not been used in more than two decades.
However, the sell-off continued after the 15-minute suspension, with the Dow
losing nearly 3,000 points or 12.9%, its worst percentage drop since 1987.
The wider S&P 500 dropped 11.9%, while NASDAQ dropped 12.3%. All three
indexes are now down more than 25% from their highs.
In London, companies in the travel sector saw big falls. Share in holiday
company 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.
The FTSE 250, which includes a number of well-known UK-focused companies,
ended down about 7.8%.
All the main European share indexes fell sharply, though they later regained
some ground. France’s Cac 40 index fell more than 5.7% and Germany’s Dax
dropped more than 5.3%.
In Asia, Japan’s benchmark Nikkei 225 closed down 2.5% and the Shanghai
Composite in China ended the day 3.3% lower.
Oil prices, which have been shaken by a price war between exporters, fell again. Brent crude dropped 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.
Global stock markets have risen, a day after billions were wiped off the value of shares amid global market turmoil.
In the US, the Dow Jones was up 123.96 points, or 0.8%, at 15,7890.70 in early trade.
European markets were also higher, and shares in the US were up shortly after trading began.
However, investors remain worried over the continuing slide in oil prices and slowing growth in China.
London’s FTSE 100 index, which measures the share prices of the 100 most valuable companies traded on the London Stock Exchange, was up nearly 1.5%.
The index rose 83.10 points to 5,756.68, and the share indexes in France and Germany were both up by more than 1.5%.
Much earlier, Japan’s main share index closed down by more than 2%.
On January 20, global stock markets suffered hefty losses and London’s FTSE 100 ended the day down 3.5%.
By doing so it entered a “bear market”, having fallen 20% from its record high in April 2015.
Oil prices remained weak on January 21, having hit their lowest levels since 2003 in the previous session.
A brief rally in crude prices quickly ran out of steam, and after climbing back above the $28-a-barrel mark, Brent crude fell back to $27.75.
US crude was 1% lower on the day, trading at $28.09 a barrel, having fallen below $27 on January 20.
Crude oil prices have been falling since mid 2014, but oil-producing countries have maintained output despite the decline, contributing to the excess supplies on the market.
Earlier in the week, the International Energy Agency warned that oil markets could “drown in oversupply” in 2016.
Global stock markets have tumbled with investors unsettled by the continued slide in oil prices and fears about the impact on global growth.
Germany’s Dax, the UK’s FTSE 100, and the Cac 40 in Paris were all down by about 3%, wiping out the gains recorded on January 19.
The drop in the FTSE puts it on the brink of a so called “bear market” – a 20% fall from April’s all-time high.
The falls came after Asian stocks closed sharply lower.
Dubai markets closed at a 28-month low, while in Japan shares fell to their lowest level since October 2014.
Top emerging market shares and currencies were also caught up in the turmoil, with the Russian ruble hitting a new record low of 80.295 against the dollar.
The downwards move came after oil prices continued to slide, with the price of international benchmark Brent Crude down 2.4% at $28.08 a barrel, around a 12-year low.
The oil price has plummeted 75% since mid-2014 as oversupply, mainly due to US shale oil flooding the market, has driven down the cost of the commodity.
At the same time, demand has fallen because of a slowdown in economic growth in China and Europe.
The world’s energy watchdog warned on January 19 that the market could “drown in oversupply”.
The International Energy Agency, which advises countries on energy policy, said it expected the global glut to last until at least late 2016.
The IMF’s decision on January 19 to downgrade its global growth forecast for this year and issue a warning about the outlook added to the dark mood among investors.
World stocks are now at their lowest levels since 2013, with the MSCI world equity index down 9.9% in January, its biggest drop since 2009.
Analysts said they expected the volatility to continue.
World’s markets have staged a partial recovery after a week of precipitous falls and volatility.
London’s FTSE 100 index was up over 1% in mid-afternoon trading, while Germany’s DAX was up 1.76% and France’s Cac 40 was up more than 2%.
On Wall Street, the Dow Jones index opened nearly 1% higher after better-than-expected US industrial production data helped steady the ship.
Fears over a weakening global economic outlook had unsettled investors.
World’s markets have staged a partial recovery after a week of precipitous falls and volatility
The FTSE 100 had fallen 10% since early September, wiping £175bn off the value of listed businesses.
Steven Saywell, head of foreign exchange strategy at BNP Paribas, said the real concern over the faltering eurozone economy was inflation, currently running at 0.3%.
“We believe the risk is it could fall even further,” he said.
BNP Paribas believes European Central Bank president Mario Draghi should take bold measures to buy sovereign bonds in an attempt to convince investors that the rate of inflation would increase.
Global stock markets have fallen after some members of the Federal Reserve suggested its stimulus measures may be increasing the “risks of future economic and financial imbalances”.
The comments came in minutes of the Federal Reserve’s last meeting, where the Fed said it had left its monthly $85 billion bond-buying plan in place.
US markets opened lower on Thursday after recording their biggest drop so far this year on Wednesday.
European markets all closed down.
The Fed comments have raised expectations that the US central bank may scale back its bond-buying programme earlier than predicted.
Currently, the Fed is carrying out its plan of buying $85 billion of bonds a month until the US jobs market sees a substantial improvement.
By buying bonds, the Fed keeps interest rates low, which keeps the cost of borrowing for mortgages and other loans low.
However, the minutes of the Fed’s meeting in January showed that some members were concerned that the bond-buying programmes could push up inflation or could “foster market behavior that could undermine financial stability”.
The minutes said that “a number of participants” commented that an ongoing review of the effectiveness of the bond programme “might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred”.
Global stock markets have fallen after some members of the Federal Reserve suggested its stimulus measures may be increasing the risks of future economic and financial imbalances
The bond-buying programme has been cited as a major reason for the rise in share prices in recent weeks, so signs of a premature end have hit stocks.
“US liquidity concerns following the Fed minutes looks like the pin which will burst the recent bubble in equities,” said Mike McCudden, head of derivatives at Interactive Investor.
On Wall Street, the Dow Jones index ended Wednesday down 108.13 points at 13,927.54, and continued to fall on Thursday, shedding a further 61 points by midday in New York.
In Asia, Japan’s Nikkei 225 fell 159.15 points, or 1.4%, to 11,309.13, while in Hong Kong the Hang Seng index closed down 400.74 points, or 1.7%, at 22,906.67.
European markets all fell, with London’s FTSE 100 closing down 1.6% at 6,291.54 and the Cac 40 in Paris falling 2.3% to 3,624.80.
The dollar rose 0.5% against the euro on Thursday, with one euro buying $1.3206.
While the dollar had been boosted by the Fed minutes, the euro was also hit by the latest survey of the eurozone region which suggested the downturn in the region’s businesses had worsened.
The latest eurozone purchasing managers’ index (PMI), compiled by research firm Markit, fell to 47.3 this month, down from 48.6 in January. A reading below 50 indicates contraction.
The figure was the lowest reading for two months and appeared to dash hopes that the eurozone’s economy would show signs of revival.
It also indicated a growing divergence between Germany and France, with output rising in Germany but declining at an increasing pace in France.
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