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Worst Week for Global Stock Markets: Coronavirus Impact in 10 Points

Mar 13, 2020

With stock prices gyrating every day to coronavirus related developments, the weekend must come as a relief.

Here's a look at how deep the impact has been felt in the global financial markets:

  1. Stock markets worldwide saw sharp losses on Thursday, with the benchmark indices on Wall Street and London saw their steepest daily falls since the Black Monday in 1987.
  2. In the US, stocks witnessed a sharp sell-off on Thursday.
    • Thursday's dive follows the intense fall on Wall Street seen throughout the week. The S&P 500 triggered the first circuit breaker of the week on Monday after falling 7%. This fall came after the crash in crude oil prices.
    • The markets bounced back Tuesday, only to retreat on Wednesday after the World Health Organization (WHO) declared the coronavirus a pandemic.
    • At the closing bell, the Dow Jones Industrial Average finished down around 2,350 points (down 10%). The S&P 500 plunged 9.5%, while the Nasdaq Composite Index tumbled 9.4%.
    • Stocks were deep in the red the entire session, which was paused for 15 minutes early in the day. Automatic suspension was triggered after the S&P 500's losses hit 7%.
    • On Thursday, equities erased their losses briefly after the US Federal Reserve announced measures to inject an additional US$ 1.5 trillion in cash into financial markets. The announcement, which came after European markets had closed, sent shares higher, but they dropped back by the end of the day.
  3. Coming to the European markets now, the main UK index dropped more than 10% yesterday in its worst day crash since 1987. Losses on the UK's FTSE 100 wiped some 160.4 billion pounds in wealth from the market.
  4. Frankfurt had its worst day since 1989, the year the Berlin Wall fell, while Paris suffered its biggest one-day loss on record.
  5. However, European stock markets rallied this morning. The signs of a US stimulus package helped soothe fears about an economic shock. At the time of writing, European indices were trading mixed. Shares in London were up 4.1%, while the Paris CAC gained 3.5%. However, the Frankfurt DAX crashed 9.3%.
  6. Stocks in Asia also saw consistent sharp falls throughout the week. Japan's benchmark Nikkei 225 index closed 6.1% lower today.
  7. Shanghai was down around 1% as the number of new cases in China shrunk and people slowly returned to work in the worst-hit areas.
  8. In Asia, circuit breakers were also triggered in many exchanges including India, Japan, South Korea, Indonesia, Thailand, and the Philippines this week.
  9. Indian share markets saw their biggest ever single day fall this week. The indices today hit their lower circuit limits within 15 minutes of the opening session. This was seen the first time in 12 years that trading in Indian markets had to be halted. The carnage didn't continue, however, as Indian indices recovered after major free-fall as trading resumed after 45-minute halt.

    From there on, it was an upward rally as markets went on to witness buying interest and saw their biggest intraday recovery ever.
  10. On a year-to-date (YTD) basis, the worst fall has been witnessed by European markets. Here's a view on how the world markets have performed since January 2020.
  11. US Markets European Markets Asian Markets
    The Dow Nasdaq S&P 500 London Paris Germany Hang Seng Nikkei 225 Shanghai Sensex
    -27% -21% -24% -31% -33% -32% -16% -25% -6% -17%

    This worldwide crash has put March 2020 into the history books. Now, how markets perform in the coming days will be something to watch out.

    Rini Mehta

    Rini Mehta is a keen follower of the stock markets and economy. At Equitymaster, she covers daily stock market moves and broader market trends across Indian and global markets.

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