After European Stock Markets, Wall Street is Also Falling Sharply

13

The New York stock exchange temporarily halts trading in the event of major price falls. If the drop is more than 20 percent, trading will stop all day. Monday morning, trading stopped for the first 15 minutes since December 2008.

The European stock markets received an unprecedented blow on Monday after two and a half weeks of major declines. The AEX opened another 5.2 percent lower, standing at 486.82 at 2:45 PM – a loss of 8.3 percent from Friday. Shell opened 22 percent lower and was at a 15 percent price loss afternoon. The banks ING and ABN Amro also suffered heavy exchange rate losses.

Since February 19, the Amsterdam AEX index had already fallen 13 percent from 629 to 531 Friday. Now the total decline is already 20 percent, which can be referred to as a crash or bear market.

The cause is the fear of recession due to the coronavirus, combined with a plummeted oil price due to arguments between Saudi Arabia and Russia about the reduction of production.

Oil prices fell 30 percent from $ 46 to just above $ 30 tonight after Russians and Saudis decided to start a price war. At the beginning of this year, a barrel of oil cost $ 68 a barrel, which means that the oil price has more than halved. This sudden drop fueled the crisis on the stock markets that were already dominated by the coronavirus. Later, the oil price recovered somewhat to $ 35.

French Finance Minister Bruno Le Maire said this morning that Europe needs a strong package of stimulus to cope with the impact of the new coronavirus. According to him, the size of the stimulus package will be discussed at the forthcoming meeting with European colleagues on 16 March. The Italian government will further increase spending to offset the economic impact of the coronavirus outbreak.

Prime Minister Giuseppe Conte spoke of a “massive shock therapy” on Monday. ‘We will not stop here. We will use massive shock therapy. To get out of this emergency, we will use all human and economic resources, ”said Conte. Italy should actually cut spending due to high government debt, but an exception is likely to be made now.

European flexibility
Conte went on to say that the Italian government would ‘fully’ use the flexibility provided by European fiscal rules. Economy Minister Roberto Gualtieri pledged approximately EUR 7.5 billion last week to deal with the economic consequences of the largest coronavirus outbreak in Europe. The Italian budget deficit will, therefore, rise from 2.2 percent to 2.5 percent this year.

Asian stock markets plunged earlier on Monday due to mounting concerns about the impact of the coronavirus on the economy, and about the oil production war between Saudi Arabia and Russia. The stock market in Tokyo fell by 5.5 percent, that in Sydney by 7.3 percent and in Seoul by 4.4 percent.

Leave A Reply

Your email address will not be published.