The US stock markets are making the most volatile moves since 1987 amid increasing fear of economic meltdown, the looming threat of recession and massive growth in unemployment.
The Coronavirus inspired market selloff is significantly strong as it wiped off all the gains in a single month that the Dow Jones Index has generated under Trump’s presidency since 2017.
The S&P 500 has also been following the bearish trend, losing close to 30% of value in the last month alone.
Indeed, the circuit breaker triggered for the fourth time in the last eight trading sessions- circuit breakers are designed to halt trading for a few minutes to avoid panic-selling.
The Fed’s initiatives of bringing interest rates to zero range along with the economic package of $750bn fails in appeasing investor’s sentiments.
Donald Trump directed authorities to increase the liquidity for all sizes of businesses to avoid bankruptcies. The big companies like aerospace, airline, the travel industry and many more are seeking help from the government in the form of bailout packages.
“There’s no clarity. We don’t know what the real effects from these monetary and fiscal policies are going to be for a while,”Rich Sega
“There’s no clarity. We don’t know what the real effects from these monetary and fiscal policies are going to be for a while,” says Rich Sega, global chief investment strategist at asset manager Conning. “We need to see data that shows that the infection rate has peaked.”
The airline stocks lost more than half of value while hotel and travel companies are also facing massive losses.
Automakers are struggling to operate their production facilities due to lockdowns across Europe and the Asia Pacific.
Oil prices lost more than half of their value due to declining demand on coronavirus fear along with market share war between the largest OPEC producers. Recently, Saudi Arabia and UAE announced to pump more oil to enhance its global market share.
Oil companies are down to earth after Brent crude plunged to $25.58 a barrel, while US crude slid to US$22.35 – the lowest level in nearly two decades.