US stocks fell Thursday, with the Dow Jones Industrial Average and the Standard & Poor’s 500 Index suffering from their worst day since the “Black Monday” collapse on October 19, 1987. While the S&P 500 and the Nasdaq Composite Index joined the Dow in The downside. The risks of a global recession increase with governments disrupting travel and trade to contain the Corona virus!
Huge Losses Reported Worldwide From All Global Markets!
Shares fell at the opening bell after the limited losses of stock index futures contracts… after President Trump announced on Wednesday evening restrictions on travel from Europe to the United States in a single move, as he promised to provide financial aid to the “sick, isolated or caring for sick people due to the Corona virus.” The president also said that the Small Business Administration will provide emergency low-interest loans available to the affected companies and said that the government will defer tax payments to some individuals and companies for a period of three months.
But Jasper Lawler, head of research at London Capital, said: “The biggest disappointment on Wall Street was the lack of specific ways to support people and small and medium-sized companies of the kind announced in the UK budget.”
In unprecedented moves to contain the epidemic of corona virus locally, New York State has banned all social gatherings of 500 or more, while basketball, baseball, hockey and football authorities cancelled or postponed full sporting seasons, and the US Capitol Building closed to the public.
Global Recession Is Likely Now More Than Ever!
Analysts said the global recession has become more likely, as manufacturing, service industries, international trade and travel have been affected by government restrictions on the movement of people in an attempt to contain the spread of the Corona virus.
The Standard & Poor’s 500 and Nasdaq indexes went down by at least 20% from their record highs since the all time highs. A widely accepted definition of a “bear market” one day after the Dow Jones entered that region.
Shares ended near session lows even though the Federal Reserve said it would pump more than $ 1.5 trillion in temporary liquidity (one-night loans) into the financial system on Thursday and Friday. And a wide variety of US Treasury bonds would start buying as part of its monthly purchases. They were these steps taken to attempt to mitigate what the New York Federal Reserve has described as “unusual market turmoil due to the spread of the corona virus.”
Central Banks Offered 500 Billion to one – month purchase facilities!
The central bank offered $500 billion through a three-month repurchase facility on Thursday. And, an additional $500 billion would be offered from one-month repurchase facilities for three months on Friday.
Wall Street shares rallied on Friday after US President Donald Trump declared the corona virus outbreak a national emergency… freeing up money to fight the spread of the disease. As the president spoke the three main US indexes jumped more than 9%. Earlier, London’s FTSE 100 closed up 2.5%, retreating from an early surge, while other European indexes made similar moves.
The rally comes a day after Wall Street suffered its biggest losses since 1987. Investors fear economies could slide into a recession as a result of the pandemic. And as business is disrupted events are cancelled and schools in many countries close in an effort to contain the spread of the virus.
Indexes Globally Have Fallen More Than 20% From Recent All Time Highs!
Many indexes around the world have now fallen more than 20% from their recent highs – a red flag for recession. In the US, House Speaker Nancy Pelosi, a Democrat, said her members would pass a bill that provides paid sick leave, among other aid. But Republicans and the White House have not said they will support it.
US Secretary Steven Mnuchin pledged the US would use “whatever tools we need.” The national emergency declaration helps speed some kinds of funding to local governments. In an interview with US broadcaster CNBC, he said he believed the corona virus slowdown would be short-term and said the situation in 1987 when markets dropped some 20%, was a “much scarier time!”
“This is nothing compared to that,” he said.
So lets monitor this collapse closely and see what will happen in the next few weeks!