Stocks, oil back in the red
Global stocks stumbled back into the red on Wednesday with Wall Street futures pointing to more losses ahead as fears over the coronavirus fallout eclipsed large-scale support measures rolled out by policymakers around the globe.
Some traditional safe-haven assets such as gold were also under pressure as battered investors looked to unwind their damaged positions. Oil prices fell for a third session with U.S. crude futures tumbling to a 17-year low.
European equity markets suffered hefty losses with London and Frankfurt down 3.5% in early trade while Paris and Milan slipped around 3%. The falls in Europe followed losses in Asia where MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 3.8% to lows last seen in summer 2016, led by a 6.4% fall in Australia. Japan’s Nikkei erased early gains to dip 1.7%. MSCI’s global stocks index dropped 1%.
Tuesday’s Wall Street gains came as policymakers cobbled together packages to counter the impact of the virus. The Trump administration unveiled a $1 trillion stimulus package that could deliver $1,000 cheques to
Americans within two weeks to buttress a virus-stricken economy.
Britain launched a 330 billion pounds rescue package for businesses threatened with collapse while France, which went into lockdown on Tuesday, is to pump 45 billion euros of crisis measures into its economy to help companies and workers.
Still, forecasters at banks are projecting a steep economic contraction in at least the second quarter as governments take draconian measures to combat the virus, shutting restaurants, closing schools and calling on people to stay home.
Tuesday saw also the U.S. Federal Reserve step in again to ease funding stress among corporates by reopening its Commercial Paper Funding Facility to underwrite short-term corporate loans.
Oil prices fell as the outlook for fuel demand darkened with travel and social lockdowns triggered by the coronavirus epidemic.
U.S. crude was down 84 cents, or 3.12%, at $26.11 a barrel by 0822 GMT, having earlier fallen to $25.83 a barrel, the lowest since May 2003.