After last week’s “Black Week”, global financial markets have been in turmoil this week. U.S. stocks on the 16th and 18th, respectively, are plummeting, U.S. stock indexes, international oil prices, long-term U.S. bond yields are the biggest weekly decline since the 2008 financial crisis.
Late in the day, U.S. stocks post biggest weekly decline since 2008
On the third Friday in March (March 20), U.S. stocks ushered in the first “four-right expiration date” after the bull-bear switch, also known as the “Four Witch Day”, when stock index futures, stock index options, individual stock futures and individual stock options expired at the same time. Fund managers make position adjustments, and often the market is volatile.
U.S. stocks opened before the three major indexes rushed back, the end of the dive, the S. and P. 500 index futures fell more than 5 percent, Dow futures, Nasdaq futures fell nearly 5 percent. Dow futures fell 17.30 percent this week, while the Standard and Poor’s 500 index fell 14.98 percent and Nasdaq futures fell 12.64 percent, extending from the previous week’s decline.
20, U.S. stocks opened slightly higher after entering a volatile trend. U.S. stocks rose more than 400 points, or 2 percent, after the Federal Reserve announced an expansion of money-market facilities, including purchases of municipal debt. But then the three major indexes collectively turned down and the decline widened rapidly. The U.S. announced that its borders with Mexico and Canada would be closed to all non-essential exchanges, adding to the decline in U.S. stocks.
By the close, the Dow was down 4.55 percent at 19,173.98 points, losing 20,000 points, the Standard and Poor’s 500 index was down 4.34 percent at 2,304.92 and the Nasdaq was down 3.79 percent at 6,879.52. In addition, the Dow is down 17.3 percent this week, the Nasdaq is down 12.64 percent, the S.P. 500 is down 14.98 percent, and all three major indexes are the biggest weekly declinesinces since the 2008 financial crisis.
March 20, Dow intraday trend
Sal Bruno, chief investment officer at Index-IQ, believes investor sentiment has had a far greater impact on market trading than the actual data. That’s what causes the volatility.
“Cash is king”, US bonds, oil and gold all fell this week
In addition to expanding money markets, the Fed on Friday announced joint action with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank to increase currency swap lines and further increase liquidity. The swap will be launched on March 23rd and will last at least until the end of April.
The dollar index was down 0.28 percent at 102.3979 late Friday. The dollar index jumped nearly 4 per cent this week, its biggest weekly gain since 2008, helped by a tight dollar.
Ebrahim Rahbari, global head of foreign exchange analysis at Citigroup, said that despite the announcement of coordinated action by the world’s major central banks on Friday, liquidity in the money markets remained low, showing little sign of improvement, and there were still signs of forced sell-offs in foreign exchange and interest rate markets.
Rising risk aversion led to a flood of money into bond assets, 20, U.S. bond yields fell across the board. Among them, the yield on 10-year U.S. bonds fell 30 basis points to 0.848 percent, its biggest one-day decline since 2009, and the 30-year U.S. bond yield fell 37.5 basis points to 1.422 percent, its biggest one-day decline since 2008.
Gold futures for April delivery rose $5.30, or 0.4 percent, to $1,484.60 an ounce on the New York Mercantile Exchange on Friday. Gold futures are down 2.1 percent this week.
The World Gold Council report notes that slowing economic growth will undoubtedly affect gold consumption demand, and that volatility in gold is likely to remain high, but high risk, combined with widespread negative real interest rates and more central bank quantitative easing, will support investment demand for gold as a safe-haven asset.
NYMEX crude oil futures trend five-day K-line chart
International oil prices continued to fall on Friday, with NYMEX crude futures closing down 8.76 per cent at $23.64 a barrel, down 26.38 per cent for the week, the biggest one-week decline since 2008, while Brent crude futures closed down 3.14 per cent at $29.35 a barrel, down 17.18 per cent for the week.
In addition to the collapse of talks on a deal to cut production and a “price war” launched by Saudi Arabia, the pressure of falling oil prices is now increasingly coming from the global spread of the new corona pneumonia epidemic, according to a report by Austria’s JBC energy consultancy.
According tomedia reports, u.S. senators have put pressure on Saudi Arabia on the 18th to stop the “price war” and called on U.S. President Donald Trump to impose an oil embargo on Saudi Arabia and Russia.
Analysts at Jeffery said that if the “price war” continued, about 4m barrels of crude oil would pour into the market from April 1st, potentially pushing oil prices below $20 a barrel.
More cities, U.S. and other economic expectations have been lowered
THE LATEST WHO DAILY OUTBREAK REPORT ON NEW CORONARY PNEUMONIA SHOWS THAT AS OF 23:59 BST ON 19 MARCH, 234,073 CASES OF NEW CORONARY PNEUMONIA (24,247 NEW CASES) AND 9840 DEATHS (1061 NEW CASES) HAD BEEN CONFIRMED WORLDWIDE. Of these, there have been more than 100,000 cases in the European region, bringing the total to 104,591 (new 17,506 cases) and 4899 deaths (new 816 cases).
At present, Italy, Spain, Belgium, France, Berlin and other European countries or cities have implemented the “closed city.”
According to real-time data from Johns Hopkins University in the United States, as of 18:00 ET on the 20th, there were 18,563 confirmed cases of new coronary pneumonia in the United States and 227 deaths. San Francisco, New York, California, Los Angeles and other serious affected areas have also issued a “city closure order.”
The growing number of new cases worldwide has been capped, with major agencies lowering their economic forecasts.
Goldman Sachs expects US GDP to fall by a record 24 per cent in the second quarter. Goldman Had earlier forecast a 5% decline in U.S. GDP growth in the second quarter. It noted that preliminary data for the latest week reinforced Goldman’s confidence that GDP would fall sharply.
Deutsche Bank said on Friday that the outbreak could plunge the UK into its worst recession in 100 years, with economic growth falling by 6 per cent. Earlier, Germany, France, Japan, South Korea and other countries have also been lowered economic growth forecasts.
The European Commission said in a statement Friday that assuming the public health crisis continues into early June or beyond, economic activity will shrink by 2020 to the extent that economic activity is at its worst in 2009.