Following unprecedented drops in the financial markets over recent weeks, several investors have turned back to US stocks, but most traders are hesitant and fear another spout of market drops as the Covid-19 pandemic spreads across the world. New York, the US financial district, is quickly becoming a hub for the disease with more than 59,000 confirmed cases and just under 1,000 deaths.
Investors from BlackRock Inc have become more bullish in recent trading hours, following emergency stimulus packages from the US government and the Federal Reserve Bank. The Dow Jones Industrial Average saw its largest weekly rally since the late 30s after President Donald Trump announced that he wants to jumpstart the US economy in the following weeks despite the uncertainty and fear surrounding the coronavirus pandemic.
However, some economists and investors are hesitant to return to stocks as the volatility and uncertainty outweigh the potential gains.
Some investors believe that a resumption of normal business operations and workloads could help kickstart the world’s largest economy, however, health professionals have warned that a rushed and careless approach to refuel the economy could have a domino effect on the impact of the pandemic. Confirmed cases of coronavirus have surpassed the 140,000-mark, overtaking China by nearly double the amount of infections.
Stock markets have been unsettled especially during recent weeks, dropping by around 30 percent turning into a bearish market but then surging on new hopes that support measures and state stimulus packages could propel the economy back into shape.
Shares in Asia struggle against Covid-19 fears as central banks try to find solutions
On Monday 30th March 30, 2020, shares in Asia dropped as well as crude oil prices as growing concerns of a global recession mount. Fears are also increasing due to the possibility that the worldwide lockdown could go on for months to come, which is having an unprecedented impact on global growth.
Japan’s Nikkei fell by just under 3 percent and Shanghai blue chips fell by 1.8 percent. MSCI’s broadest index of Asia-Pacific shares excluding Japan, shed more than 0.5 percent.
In a joint effort central banks have used all sorts of emergency measures to boost economic activity from interest rate cuts to asset-buying programs, which has alleviated liquidity strains in the markets.
The start of this week has seen China slashing its interest rate benchmark by 20 basis points as it tries to combat the impact of the coronavirus outbreak.
Policymakers in the UK have warned that the social lockdown procedures could go on for months to come. Similarly President Trump said that he was considering quarantining New York and other neighboring states to slow the spread of the new coronavirus, regardless of earlier assertions that he and his administration would be working to resume economic activity before the end of the Easter period.
Japan revised its travel ban list to include anyone travelling from China, the US, South Korea and most of the Eurozone.
The US dollar also struggled last week dropping against a basket of major currencies. Investors’ bearish attitude towards the dollar meant that other safe haven commodities such as gold were having a field day but this soon ended after investors engaged in a quick sell off to liquidate profitable positions to compensate for other losses. Gold lost 0.3 percent landing at just over 1,610.00 dollars per ounce.
Crude oil prices took another dive following resilience from Russia and Saudi Arabia both refusing to relinquish their stance in the oil price war despite airlines, tourism and global traffic grinding to a near standstill, which has zapped demand for energy.
US crude oil shed more than 95 cents to 20.54 dollars per barrel and Brent crude futures fell by 1.46 dollars to just under 23.50 USD per barrel.
Consumer sentiment reaches rock bottom pushing US stock markets over the edge…again
On March 27th global financial markets made a U-turn following a couple days of rallying, falling as consumer confidence takes a sharp blow from the spread of the coronavirus.
Markets in the US and Europe also dropped despite the Trump administration passing a monumental support package.
In accordance to a survey by the University of Michigan published on Friday 27th of March, consumer confidence has dropped to levels last recorded in 2016 as the coronavirus continues to spread hitting businesses and societies across the world.
Richard Curtin, the University of Michigan’s director of the survey said: “The extent of declines in consumer spending in the months ahead will depend on the success in curtailing the spread of the virus and how quickly households receive funds to relieve their financial hardships. Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism.”
“Rebuilding confidence first requires a clear and unmistakable turning point in the fight against the virus as well as continued financial support to avoid a deeper and extended recession. Economic policies must quickly adapt to a new era that will reorder the spending and saving priorities on consumers.”
Over 3 million Americans filed for unemployment, an all-time high with businesses, schools and facilities being forced to shut down. Fears of a global recession have led to fluctuations in the market and has rattled investors around the world.