European markets dive 4%, Asia stocks nosedive
LONDON: European stocks dived more than four percent in opening deals yesterday as the coronavirus death toll continued to soar and US lawmakers failed to agree a trillion-dollar emergency package. London’s benchmark FTSE 100 index of major blue-chip companies tumbled 4.8 percent to 4,943.51 points, Frankfurt’s DAX shed 4.6 percent to 8,521.94 and the Paris CAC 40 sank 4.4 percent to 3,870.06, compared with Friday’s closing levels.
Asian equities were also hammered despite vast economic stimulus efforts worldwide, with investors spooked once more by the relentless COVID-19 pandemic. “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.
“James Bullard, President of the St Louis Fed, said US unemployment could reach 30 percent in the second quarter due to coronavirus shutdowns, while he warned GDP could decline by 50 percent. This would be an unprecedented event.” The global death toll from the virus has surged past 14,400, with nearly a billion people confined and nonessential businesses shut in dozens of countries and growing fears about a recession.
“Countries across the globe (are adopting) increasingly stricter measures to stop the spread of coronavirus,” added City Index analyst Fiona Cincotta. “These very measures are threatening to overwhelm central banks’ efforts to cushion the economic fallout from coronavirus, increasing the prospect of a deep global recession.” Asian markets were hammered yesterday despite massive economic stimulus efforts worldwide, with investors spooked by the relentless march of the coronavirus pandemic.
Wellington nosedived 7.6 percent as New Zealand announced a four-week lockdown to stop the spread of the coronavirus. The Hang Seng Index in Hong Kong ended the day down 4.9 percent, Sydney dropped 5.6 percent, Shanghai shed 3.1 percent and Taiwan was off by 3.7 percent. Singapore tanked 7.5 percent, Jakarta lost 3.8 percent, and Seoul was down 5.5 percent.
Tokyo was the exception, closing two percent higher as a cheaper yen against the dollar boosted Japanese markets. Nikkei heavyweight SoftBank Group said it would sell up to $41 billion in assets to finance a stock buyback, reduce debt and increase its cash reserves, boosting its share price by more than 18 percent in the last hour of trade.
The grim trend continued when European markets opened. In early trade, London tumbled 4.8 percent, Frankfurt lost 4.6 percent and Paris was down 4.4 percent.
Economists and analysts are now worried about how deep the impact of the pandemic could be on the global economy, with social distancing measures and lockdowns dealing serious blows to many industries. Airlines have been hit particularly hard, with isolation measures shutting down routes and grounding fleets worldwide.
Long-haul giant Emirates announced a two-week suspension of all its passenger flights, following a UAE government directive. Singapore Airlines, meanwhile, said it would ground most of its fleet until the end of April. The carrier said it was facing the greatest challenge in its existence. European plane maker Airbus said it was cancelling its planned 2019 dividend payment and abandoning 2020 forecasts.—AFP