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
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.
The Dow Jones Industrial Average has passed the 20,000 milestone for the first time on January 25.
The S&P 500 and tech-heavy NASDAQ were also at new highs, fuelled by hopes that President Donald Trump’s policies will boost the economy.
The Dow was up 0.8% at 20,074 points in afternoon trading.
Investors’ cash has poured into shares on hopes of tax cuts and higher growth.
Image source AP
Donald Trump’s senior adviser Kellyanne Conway was quick to comment on the news, tweeting that the landmark was down to “The Trump Effect”.
If the index stays above 20,000 by the time the day’s trading ends, then it would mean the 42-session rise from the first close above the 19,000 mark would be the second quickest 1,000 point rise of all time.
The Dow rose from 10,000 to 11,000 in only 24 trading days between March 29 and May 3, 1999, while the rise from 18,000 to 19,000 took 483 trading days (nearly two years).
Financial stocks have been a major factor in the gain – with Goldman Sachs and JPMorgan accounting for around 20% of it.
This is because investors believe that some of Donald Trump’s policies will trigger inflation and produce a rise in interest rates.
US shares closed at record levels, helped by strong data on the manufacturing sector.
The Dow Jones rose 26 points to close at 16,743, its second consecutive record close.
The broader S&P 500 added just a point, but that was enough to secure its third consecutive record session.
US factories remained busy in May, according to the manufacturing activity index compiled by the Institute for Supply Management (ISM).
US shares closed at record levels, helped by strong data on the manufacturing sector (photo AP)
The ISM had to correct its original release which showed slowing activity, but had been calculated incorrectly.
“The market has lately been focused more on the weak economic news and the bond market, but we saw a reversal of that today with the revised [ISM] numbers,” said Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey.
“But it’s hard to move the market higher, considering we are fairly fully valued at this point,” he said.
The technology focused NASDAQ fell 10 points to close at 4,237.
Shares in Botox-maker Allergan soared 9% after Valeant Pharmaceuticals said it would go hostile with its bid for the company.
Activist investor, Bill Ackman, who is partnering with Valeant in the bid, said he would move to replace almost the entire board of Allergan.
Equipment maker Caterpillar was the biggest winner among the Dow Industrials, rising 1.5%.
Technology giant Intel also had a strong session, adding 1.1%.
On the NASDAQ, Broadcom shares rose over 10% after the company said it would look for a buyer for its division that makes chips used in mobile devices.
The S&P 500 index closed on March 28 at a record high of 1,569, up 6 points or 0.4%.
The last time the S&P 500 index broke into new territory was on October 9, 2007, when it closed at 1,565.
The Dow Jones index was also up 0.4%, with a rise of 52 points taking it to a record 14,578.
The S&P 500 index closed on March 28 at a record high of 1,569
The Nasdaq joined in the upbeat mood created by the smooth reopening of banks in Cyprus and generally positive economic news. It rose 11 points, or 0.3%, to close at 3,268.
The S&P has been near its record high for several weeks, despite the still sluggish performance of the US economy. This means it finishes the quarter 10% higher than its level at the beginning of the year and more than double its low point during the financial crisis.
In relatively light trading, the biggest gainers in the Dow Jones were two IT companies – IBM and Hewlett-Packard, both up over 1%. The biggest falls were by Chevron and JP Morgan Chase.
On the currency markets, the euro rose 0.4 cents to $1.282.
US markets will be shut for the Good Friday holiday.
Google shares’ trading was suspended for two-and-a-half hours after the internet giant released its third-quarter results early by mistake.
Its quarterly profits fell 20% from a year earlier to $2.18 billion – below analysts’ expectations.
Google blamed financial printing firm RR Donnelley for filing an early draft of the results, which had been expected after the closing bell.
Shares in Google were down 9% when trading in the stock was suspended.
When trading resumed, the shares recovered slightly to end the day 8% lower.
Google chief executive Larry Page apologized to analysts on a conference call after the market closed.
“I’m sorry for the scramble earlier today,” he said, adding that the company had had a strong quarter.
In a statement after the inadvertent release, Google said: “Earlier this morning RR Donnelley, the financial printer, informed us that they had filed our draft 8K earnings statement without authorization.
“We have ceased trading on Nasdaq while we work to finalize the document. Once it’s finalized we will release our earnings, resume trading on Nasdaq and hold our earnings call as normal at 1:30 PST.”
Google chief executive Larry Page apologized to analysts on a conference call after the market closed
The company’s draft results statement, filed with the Securities and Exchange Commission, was published at 09:30 Pacific time (16:30 GMT), three-and-a-half hours ahead of schedule.
It says “PENDING LARRY QUOTE” at the beginning, referring to chief executive Larry Page and indicating that it was not ready for publication.
Its final results statement, published at 12:00 Pacific time (19:00 GMT), included the following quotation from Larry Page: “We had a strong quarter. Revenue was up 45% year-on-year, and, at just fourteen years old, we cleared our first $14 billion revenue quarter.
“I am also really excited about the progress we’re making creating a beautifully simple, intuitive Google experience across all devices.”
Net revenue rose to $11.3 billion from $7.5 billion, but was still below forecasts.
Including websites that generate traffic for Google’s ads, revenue rose 45% to $14.1 billion.
The slide in Google’s share price took the company’s market value back down below that of Microsoft, which it had overtaken earlier this month.
Joe Saluzzi from Themis Trading said: “You can’t make those mistakes any more.”
He added: “Mistake or not, the earnings are earnings. The problem is when this happens in the middle of the day, there is no time for a conference call to massage it, there is no time for analysts’ questions and for an evaluation.”
Google completed the purchase of the loss-making mobile phone maker Motorola Mobility for $12.5 billion earlier this year and has been struggling to turn the firm around.
Costs related to the acquisition – for employee stock compensation and restructuring charges – knocked Google’s overall results, as did the strong dollar.
The company said that if foreign exchange rates had been unchanged, its revenue would have been $136 million higher.
Facebook shares have fallen to a new low, as concerns about its mobile strategy sparked a sell-off when markets opened on Friday.
Late Thursday, in its first report as a public company, Facebook said it lost $157 million from April to June.
Its shares plunged more than 16% to $22.37 when trading began in New York on Friday, worse than the declines seen in after-hours trade on Thursday.
Facebook shares have fallen to a new low, as concerns about its mobile strategy sparked a sell-off
Facebook shares were priced at $38 when it listed on the NASDAQ in May.
Facebook’s results on Thursday showed that revenue in the second quarter of the year had grown 32% to $1.18 billion, just beating forecasts. But analysts at Piper Jaffray said it appeared investors wanted “more than a slight beat”.
The number of monthly active users (MAUs) rose 29% from the same period last year to 955 million, but some analysts question the reliability of this data given the number of fake profiles on the social network.
The number of people who logged in daily to Facebook’s site from their mobile devices surged 67% year-on-year to 543 million.
But the company has yet to resolve how it generates profits as users move from the computer desktop version to accessing the site via mobile phone.
“We don’t view these results as dramatically good or bad,” said Citi analyst Mark Mahaney.
“Key questions remain: the future of Facebook mobile monetization and the future of Facebook user engagement.”
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