Central banks do not calm the market: Wall Street sinks more than 12%

Mar 17, 2020 19:40 PM

World stock markets plunged again this Monday despite measures announced by central banks to deal with the coronavirus pandemic, whose death toll, mainly in Europe, is increasing exponentially and led several countries to close their borders.

Wall Street woke up with falls close to 10%, which has activated the mechanism that paralyzes the market for 15 minutes, something that has become a habit in recent days. But the close was even worse, with the Dow Jones (^ DJI) plunging nearly 13% (2,999 points), the S&P 500 (^ GSPC) 12%, and the Nasdaq (^ IXIC) 12.3%.

Meanwhile in Europe, the world epicenter at this time of the pandemic, the situation was not much better, with Paris (-5.75%) Milan (6,105) and Madrid (7,885) as the most severely affected places.

The fall in European shares comes after the Asian stocks also closed with losses, in some cases strong, such as Shanghai (-3.4%), Shenzhen (-4.83%) and Hong Kong (-4.03 %).

The Tokyo Stock Exchange closed on its side down 2.46% to 17,002.04 points, despite urgent measures announced by the Bank of Japan (BoJ).

Coordinated action

On the economic front, the US Federal Reserve (FED) drastically lowered its interest rates to zero on Sunday, as part of coordinated global action by central banks to ease liquidity.

The Fed also announced the purchase of $ 500 billion of treasury bonds and $ 200 billion of mortgage securities to support markets.

However, this initiative did not serve to reassure the markets and the stock markets plummeted in Europe at the opening, after having fallen in the Asia-Pacific region (-9.7% in Sydney, a historical record).

Markets fear a global recession in the economy in the face of an epidemic that seems controlled in Asia but is expanding on other continents.

The European Union announced on Monday that it expects a 2020 recession of between 2 and 2.5%, while China recorded its first decline in industrial production in nearly 30 years and the collapse of its retail sales.

The world leader in tourism, the German TUI, suspended most of its activities and IAG, the group that owns British Airways and Iberia, among others, plans to reduce its flights by "at least 75%" between April and May.

This Monday at 09:00 GMT, the number of deaths worldwide from the new coronavirus was at least 6,501 dead, according to a balance sheet established by AFP based on official sources.

G7 promises "whatever it takes" to fight viruses

Group of Seven leaders said they will do "whatever it takes" to ensure a coordinated global response to the coronavirus pandemic and its economic consequences.

In a joint statement released Monday, leaders said they would muster the full power of their governments to coordinate public health measures, restore confidence in the economy, support global trade and investment, and encourage cooperation in scientific research.

The leaders also told Japanese Prime Minister Shinzo Abe that they hope he can proceed with the Summer Olympics, according to White House economic adviser Larry Kudlow.

"Everyone wants to do whatever it takes," Kudlow said Monday in an interview on Fox Business Network, after a call between President Donald Trump and the other leaders on Monday.

With information from AFP and Bloomberg