About a month ago it was assumed that the novel coronavirus would be a localized problem of China and the situation would be manageable comfortably. It’d have an impact on global markets.
But when it became clear that novel coronavirus was not limited to only China and the economic impact would be more widespread, the forecasts started to be revised down. But central banks, finance ministries, and independent economists took comfort from the fact that a rapid return to business, in general, would be a quick but small hit to activity.
According to a BBC report, global markets shares have declined globally as investors fear the Covid-19 pandemic will destroy economic growth with the government unable to take sufficient steps to stop the economic decline.
One report said that Britain’s main index fell 10% – the fastest collapse since 1987. The Dow and the S&P 500 were also in their worst daily collapse since 1987 in the US.
The US Federal Reserve and European Central Banks have lowered interest rates, but still, investors have not been convinced.
The New York Stock Exchange temporarily suspended trading on Thursday – this is the second day of the week when trading closed.
And, when trading resumed after 15 minutes, the stock continued to decline due to the collapse of the European market.
The S&P 500 index fell 9.5%, on the other hand, the Nasdaq fell 9.4%.
The British FTSE 100 index losses of $160 billion pounds. The index fell by more than 10%. in France and Germany.
Market analyst Neil Wilson of Marketwatch.com said: “Global markets are at breaking point”. And, no one knows what the total economic closure, but temporary is seemed like.
The reason for the collapse of the European market is the action taken by the US presidential administration to close the gateway to European countries, which has led to a sharp decline in travel agencies’ shares.
Asia’s securities markets have been collapsed as Japan Nikkei’s 225 indices fell 4.4% in a day.
Mukesh Ambani, Asia’s richest man and chairman of Reliance Industries, has lost $ 5 billion because of Covid-19 and Jack Ma, the founder of Alibaba, has got the title of richest person now.
The global markets have lost 20% in recent weeks, compared to the best of their recent indicators – that indicating a possible recession.
The three main central banks in the West have removed all their firepower against the slowdown in economic growth caused by coronavirus – but without much success.
Stock markets continue to fall. Thursday was the worst day in the history of the FTSE 100 since the Black Monday in October 1987.
A similar problem had occurred in 2007 during the subprime mortgage crisis when it was assumed that it is a minor and manageable problem affecting the US only. But I don’t think so I need to remind that situation how that ended.
If history is any guide then the market will eventually recover from this Covid-19 epidemic, but the experts assuming that it is going to be a V-shaped recession in the fast half of the year followed by the recovery in the second half of 2020 looks absurd after the tumultuous events of the past week. Therefore, it is assuming that the economy will decline this whole year.