March 17, 2020 08:16:04
Wall Street has suffered its biggest drop in 33 years, with coronavirus panic selling plunging global markets further into bear-market territory.
The Dow Jones index dropped 2,998 points or 12.9 per cent to 20,187.
Essentially, the latest plunge has wiped out three years worth of gains, with Dow investors back to where they started if they began investing in February 2017.
This was also the worst day since the 1987 Black Monday crash, when the industrial-skewed index shed nearly 23 per cent of its value in a single day.
The benchmark S&P 500 and tech-heavy Nasdaq indices did not fare much better, dropping 12 and 12.3 per cent respectively.
US markets hit their low point after US President Donald Trump told reporters the US “may be” heading into a recession, and the worst of the pandemic could potentially last until August.
Furthermore, it seems the US Federal Reserve’s drastic move to slash interest rates to almost zero failed to calm fears of a prolonged recession caused by the COVID-19 pandemic.
Investors are worried about how effectively governments and central banks will be able to mitigate the economic fallout from the rapidly spreading coronavirus.
The Fed’s second emergency interest rate cut in less than two weeks, and its pledge to purchase more than $US700 billion ($1.15 trillion) in assets came late on Sunday (local time).
But instead of calming investors, the promise of massive stimulus spooked them into another round of panic selling.
The Australian share market is on track to start its day sharply lower.
By 7:20am (AEDT), ASX futures were pointing to an opening plunge of 4.1 per cent or 209 points.
It will follow a pessimistic lead from Wall Street, where the frenzied sell-off became so intense that it triggered another automatic 15-minute trading halt or “circuit breaker”.
This was the fourth emergency pause on US markets in six days.
“The central banks threw the kitchen sink at it yesterday evening, yet here we are [with deep falls in stock markets],” Societe Generale strategist Kit Juckes said.
“There is a great sense that central banks are going to get to grips with the issues of getting money flowing,” he said.
“But the human problem, the macro problem, there is nothing they can do about that.”
Your questions on coronavirus answered:
Almost nothing was left unscathed — even safe-haven assets like gold dropped 0.9 per cent to $US1,503.50 an ounce.
The Australian dollar, meanwhile, dropped 1 per cent to 61.2 US cents.
Oil, already slammed by a price war, slumped to less than $US30 a barrel in early trading to lows last seen in early 2016.
What the experts are saying about coronavirus:
There was further policy easing on Monday from the Bank of Japan in the form of a pledge to ramp up purchases of exchange-traded funds and other risky assets.
New Zealand’s central bank cut rates 75 basis points to 0.25 per cent, while Australia’s Reserve Bank pumped more money into its financial system
South Korea and Kuwait both lowered rates, while Russia and Germany were throwing together multi-billion-dollar anti-crisis funds.
Chinese data has underscored just how much economic damage the disease has already done to the world’s second-largest economy, with official numbers showing the worst drops in activity on record.
China’s industrial output plunged 13.5 per cent and retail sales 20.5 per cent.
March 17, 2020 02:22:55