Global markets posted their worst week since the 2008 financial crisis between 9 March and 13 March 2020, after the coronavirus outbreak shuttered factories, grounded flights and forced entire cities into lockdown. With infections topping 169 000 across 148 countries and deaths exceeding 6 500, traders dumped shares, oil and corporate debt even as the Federal Reserve slashed U.S. interest rates to near zero on Sunday night.
The U.S. central bank’s emergency cut, announced before Asian markets opened on 16 March, lowered the federal-funds target to 0-0.25 percent and restarted crisis-era bond buying. Instead of calming nerves, the move reinforced how abruptly the economy is braking.
Dow and Nasdaq futures sank 4.6 and 4.5 percent respectively while the 10-year Treasury yield collapsed below 0.7 percent, down from 0.98 percent a week earlier. “Despite whipping out the big guns, the Fed’s action is falling short of being the decisive backstop for markets,” Vishnu Varathan, head of economics at Mizuho Bank, told ABC News. The S&P 500 opened 8 percent lower and triggered a 15-minute trading halt within minutes, the third so-called circuit-breaker in six sessions.
Oil war adds jet fuel to the sell-off
Markets were already reeling when Saudi Arabia and Russia walked away from OPEC+ output curbs on 8 March. Riyadh pledged to lift production and offered discounts to Asian buyers, sending Brent crude down another $1.01 to $32.84 a barrel in London on Monday while West Texas Intermediate flirted with the $28 handle. Energy shares bore the brunt: Europe’s oil-and-gas index plunged almost 30 percent, dragging the broader STOXX 600 down 5 percent.
Chevron and ExxonMobil both fell more than 12 percent in New York trading, erasing roughly $50 billion in combined market value. President Trump, who has championed U.S. energy independence, called the price war “devastating” for American drillers.
“We’re talking to Saudi Arabia and Russia; they’ve got to get together and stop this craziness,” he told reporters at the White House on Monday. Treasury Secretary Steven Mnuchin added that the administration could buy up to $3 billion of crude for the Strategic Petroleum Reserve, a move that may cushion shale producers but offers little immediate relief to a market drowning in supply.
Asia-Pacific rings the alarm
Regional bourses followed Wall Street’s overnight lead. Australia’s ASX 200 led losses with a 7.5 percent slide, its biggest one-day drop since 2008. India’s Nifty 50 tumbled 5.7 percent, Singapore 3 percent and South Korea 1.6 percent.
Tokyo’s Nikkei finished flat only because the Bank of Japan pledged to double equity-fund purchases to ¥12 trillion. Hong Kong’s Hang Seng dropped 2 percent while Shanghai gave up 0.6 percent after data showed Chinese industrial output shrank 13.5 percent in January-February, the steepest decline on record.
Manila shut its bourse entirely after the Philippine Stock Exchange index crashed 7.1 percent. “Trading will resume when conditions normalize,” bourse president Ramon Monzon said, without giving a date.
Europe locks down, Italy suspends trading
Milan’s FTSE MIB closed 7 percent lower after Rome extended a nationwide quarantine and Spain declared a state of emergency. Madrid’s IBEX 35 fell 8.1 percent, London’s FTSE 100 4 percent and Frankfurt’s DAX 5.3 percent. Airlines and travel stocks were crushed: British Airways-parent IAG slid 16 percent, Lufthansa 10 percent and Airbus 12 percent.
The European Central Bank pledged to buy an extra €120 billion of bonds this year but, unlike the Fed, kept key rates unchanged, arguing they were already negative. Investors judged the response timid and dumped the euro toward $1.11.
With recession models flashing red, Capitol Hill raced toward a rescue package. Senate Republicans unveiled a $1 trillion blueprint that includes $500 billion in direct payments to households, $300 billion in small-business loans and $50 billion for passenger airlines. Democrats signaled support but demanded stronger worker protections and broader unemployment benefits.
“We’re not going to let this economy fall apart,” Senate Majority Leader Mitch McConnell said on the floor Monday evening. House Speaker Nancy Pelosi countered that any bill must “put workers first, not corporations,” setting up a high-stakes negotiation expected to stretch through the week.
The White House also asked Congress to approve $46 billion in emergency funding for federal agencies and signaled it will invoke the Defense Production Act to speed manufacture of masks and ventilators. Larry Kudlow, director of the National Economic Council, conceded that second-quarter GDP “could be negative” but predicted a sharp rebound once the virus peaks. Bond markets are less sanguine: futures now price in a 70 percent chance the Fed will cut rates below zero by year-end, a step Chair Jerome Powell has publicly opposed.
Monday’s carnage extended beyond stocks. Corporate-credit spreads ballooned to levels last seen in 2016, raising borrowing costs for airlines, retailers and energy firms already drawing on bank credit lines. Gold, usually a haven, slipped 1 percent as investors sold anything liquid to cover margin calls.
Bitcoin crashed 25 percent to hover near $5 000. Whether the selling abates depends less on central banks than on epidemiology.
Chinese factories are slowly restarting, but Apple supplier Foxconn warned it could take until May to reach full capacity. South Korea reported a slowing infection rate, yet Italy and Spain log hundreds of new cases daily. U.S. testing remains patchy, raising fears that official numbers understate the outbreak.
Until the curve bends, markets will price in the worst.
