Global stock markets tumbled on Thursday, European stock markets plummeted, and U.S. futures pointing to further heavy losses on Wall Street after big declines across Asia. As US Treasuries rise and safe currencies, including the yen and Swiss franc, rise, global stock markets are moving towards a bear market.
President Donald Trump’s comments on the coronavirus are a catalyst for the final round of risk asset depletion. The lack of travel restrictions and incentives between the United States and Europe does not reassure investors. Futures prices in the major US stock markets fell the most again. Europe’s Stoxx 600 fell by more than 6%, its sixth consecutive day of declines, as travel and leisure supplies plummeted.
The Japanese stock market closed more than 4%, despite the country’s central bank once again promising to provide liquidity. Australian stocks are one of the worst-performing stocks in the world, and despite stimulus plans there, they are deeper in a bear market. Government bond yields have fallen again and oil spills have increased.
Dow Jones’s losses are up 20% from their all-time high in February
The massive stock loss means that the MSCI All Country Index has expanded its drop from last month’s high to over 20%, crossing the bear market threshold. The pressure gauge must be closed below this level for formal entry.
Trump announced steps, including lending to small businesses, and asked Congress to implement undefined payroll tax deductions. But his speech in the Oval Office seemed to give the market less confidence that the United States is gaining control over deadly viruses. The World Health Organization previously called the outbreak a pandemic, and the Dow Jones Industrial Average fell into a bear market, ending the longest bull market in US stock exchange history.
New coronavirus outbreak in Wuhan online in 2020
Sue Trinh, global macro strategist at Manulife Investment Management in Hong Kong, said, “The risk of a recession is increasing and we can’t praise it yet.” She said, “We are looking at the strong financial crisis. All the ‘solutions’ that come to mind are reminiscent of a huge financial crisis.” But more importantly, the means used to fight the virus.
There are signs that companies in the hardest hit industries are cutting credit lines to combat the impact of the virus on their businesses, which has heightened fears.