World stocks drop again on mounting economic toll from coronavirus

World stocks drop again on mounting economic toll from coronavirus

Wall Street
A man wearing a face mask takes a selfie at the Charging Bull statue near the New Stock Exchange in New York City. Angela Weiss/AFP

NEW YORK: Global stocks mostly tumbled on Monday (Mar 23) despite fresh stimulus announcements as the economic toll from the coronavirus continued to mount.

The US Federal Reserve unveiled a batch of additional aggressive measures to support the economy, but the boost was countered when a stalemated United States economy again failed to advance a key stimulus measure.

Meanwhile, German ministers agreed to blast through a constitutional limit on government deficits with 156 billion euros of new borrowing to fight the impact of the novel coronavirus.

"We're showing that, right from the beginning, we will fight with all our might against this crisis calling into question healthcare for our citizens or economic activity in this country," German Finance Minister Olaf Scholz said.

But markets continued to plummet, moving inversely to the mounting number of coronavirus cases globally.

More than 1.7 billion people have been asked to stay home in over 50 countries and territories around the world, including 700 million people in India alone.

Late Monday, Britain ordered a three-week lockdown except for essential shops and services.

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On Wall Street, the Dow suffered another big drop, this time of 3.0 per cent as the New York Stock Exchange completed its first all-electronic session in the wake of the crisis after the exchange suspended floor trading.

Stocks sold off aggressively after the Senate again failed to advance a trillion-dollar rescue package, while major cities in the United States ordered most businesses shut to try to limit the spread of the coronavirus.

Earlier, the Fed had announced several new initiatives to prop up the economy.

The central bank announced it will buy unlimited amounts of US Treasury debt - essentially printing money for the economy - as well as new steps to lend directly to small- and medium-sized companies that have been among the hardest-hit as economic activity dries up.

The Fed said it also plans to soon announce a "Main Street Business Lending Programme," and pledged it "will continue to use its full range of tools to support the flow of credit to households and businesses."

Analysts welcomed the steps, but many expect markets to remain brittle until the world's biggest economy gets a grip on the virus outbreak.

"We're going to need to see these growth rates restabilise in order for markets to heal," said Matt Jozoff, fixed income research managing director at JPMorgan Chase.

European bourses also dropped, including the German DAX which lost 2.1 per cent despite the stimulus package.

"Markets are again showing stress on fears that the economic damage will be worse than anticipated and that the response by governments and central banks will not be enough to prevent a mammoth recession," said analyst Neil Wilson at trading site Markets.com.

In a sea of red, the Tokyo stock market was a notable exception, closing two per cent higher as a cheaper yen against the dollar boosted shares in Japanese exporters.

Dow member Boeing was another rare gainer, surging 11.2 per cent following an upgrade from Goldman Sachs, which predicted the aerospace giant would survive the dual hits of the 737 MAX grounding and a brutal crisis in the airline sector due to the virus.

Shares of the company were also boosted by an announcement that it would suspend production at manufacturing centers in Washington state but not lay off staff.

The announcement implies the company believes it will secure federal backing after it pressed for US$60 billion in support for the US aerospace industry.

Key figures around 2200 GMT:

New York - Dow: DOWN 3.0 per cent at 18,591.93 (close)
New York - S&P 500: DOWN 2.9 per cent at 2,237.40 (close)
New York - Nasdaq: DOWN 0.3 per cent at 6,860.67 (close)

London - FTSE 100: DOWN 3.8 per cent at 4,993.89 (close)
Frankfurt - DAX 30: DOWN 2.1 per cent at 8,741.15 (close)
Paris - CAC 40: DOWN 3.3 per cent at 3,914.31 (close)
EURO STOXX 50: DOWN 2.5 per cent at 2,485.54 (close)

Tokyo - Nikkei 225: UP 2.0 per cent at 16,887.78 (close)
Hong Kong - Hang Seng: DOWN 4.9 per cent at 21,696.13 (close)
Shanghai - Composite: DOWN 3.1 per cent at 2,660.17 (close)

Brent North Sea crude: UP 0.2 per cent at US$27.03 per barrel
West Texas Intermediate: DOWN 3.2 per cent at US$23.36 per barrel

Dollar/yen: UP at 111.26 yen from 110.93 yen at 2100 GMT
Euro/dollar: UP at US$1.0727 from US$1.0688
Pound/dollar: DOWN at US$1.1518 from US$1.1629
Euro/pound: UP at 93.11 pence from 91.91

Source: AFP/de

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