NEW YORK, March 21 — European stocks gained yesterday following the latest stimulus measures, but Wall Street equities plunged again on mounting worries over the coronavirus as oil prices suffered another drubbing.
Economists continued to slash their projections as more governments institute measures to clamp down on most commercial activity, except for essential services.
Yesterday, New York Governor Andrew Cuomo ordered non-essential businesses to close and banned all gatherings, a dramatic escalation of mitigation steps after the nation’s most-populous state California on Thursday directed its 40 million residents to stay at home.
The Dow tumbled another 4.6 per cent, or around 915 points, to end at 19,173.98, below the level when President Donald Trump was inaugurated in January 2017.
The pummelling concluded Wall Street’s worst week since 2008.
“The rapidly spreading coronavirus has mobilized the nation’s policy makers, resulting in massive injections of monetary and fiscal stimulus not seen since 2008 and 2009,” Oxford Economics said in a note about the US.
“As menacing and damaging as the Great Recession was back then, it did not involve a daily mortality rate that is injecting a wartime mentality into the mindset of the nation and its leaders.”
Longer impact
More analysts now view the economic hit from the virus as a drag for the foreseeable future.
“The damage is not likely to pass in a month or two,” FHN Financial said in a note. “Increasingly, it appears there will be a sharp drop in global activity, followed by a period of significant weakness lasting at least two quarters, followed by a partial recovery.
“In other words, for those savvy to the alphabet soup vocabulary of recession analysis, an L-shaped recession rather than a V-shaped recovery.”
Earlier, European stocks enjoyed a rare up day after the European Central Bank and EU took unprecedented measures to prop up their economies as confinement measures to slow the spread of the coronavirus causes massive disruptions to businesses.
Paris ended the day with a gain of five per cent and Frankfurt nearly four per cent.
London’s stock market won only 0.8 per cent as an anticipated new British state stimulus plan failed to materialize.
On Friday, the ECB took its latest measure, freeing up banks to allow them to issue as much as €1.8 trillion in fresh loans. That follows a €750 billion (US$820 billion) stimulus package designed to help virus-wracked economies by buying extra government and corporate bonds.
Meanwhile, the EU moved to suspend its strict rules on public deficits to allow governments to open the money taps to face the coronavirus pandemic.
Oil markets failed to extend a rebound following a directive from US President Donald Trump to top up the Strategic Petroleum Reserve to its maximum capacity by buying a total of 77 million barrels from US producers.
US oil prices plunged 11 per cent to US$22.53 a barrel, taking its weekly loss to 30 per cent in a market pressured by crashing demand and a surge in supply due to a war for market share between Russia and Saudi Arabia.
Key figures around 2230 GMT
New York – Dow: DOWN 4.6 per cent at 19,173.98 (close)
New York – S&P 500: DOWN 4.3 per cent at 2,304.92 (close)
New York – Nasdaq: DOWN 3.8 per cent at 9,133.16 (close)
London – FTSE 100: UP 0.8 per cent at 5,190.78 (close)
Frankfurt – DAX 30: UP 3.7 per cent at 8,928.95 (close)
Paris – CAC 40: UP 5.0 per cent at 4,048.80 (close)
EURO STOXX 50: UP 3.9 per cent at 2,548.50 (close)
Hong Kong – Hang Seng: UP 5.1 per cent at 22,805.07 (close)
Shanghai – Composite: UP 1.6 per cent at 2,745.49 (close)
Tokyo – Nikkei 225: Closed for a public holiday
Brent North Sea crude: DOWN 5.0 per cent at US$26.98 per barrel
West Texas Intermediate: DOWN 11 per cent at US$22.53 per barrel
Dollar/yen: UP at 110.85 yen from 110.71 yen at 2100 GMT
Euro/dollar: UP at US$1.0705 from US$1.0692
Pound/dollar: UP at US$1.1645 from US$1.1485
Euro/pound: DOWN at 91.78 pence from 93.09 pence— AFP
