Post the recession of 2008, this is touted to be the biggest drop in the global stock market. Hundreds of billions have been wiped off the market in one single day, i.e., on Monday. After the break off between OPEC and Russia, the stock market started falling rapidly due to immense drop in the price of crude oil. Adding to the woes was the growing number of coronavirus cases being reported from various parts of the world.
Around £125bn was removed from the value of FTSE 100 in its 5th straight day of losses. The index lost around 7.7% to end the day below 6000 points. This is the lowest achieved by the index since the Brexit vote of 2016.
The worst scenario is right now in Italy. Guiseppe Conte, the Italian Prime Minister extended the red zone to the whole country. Any public gathering is banned in the country and movement apart from work and emergencies is completely restricted.
The US stock market failed to keep pace with the constant buy and sell that was taking place just after opening. The DOW Jones Industrial index slipped by a major 7.8%, lost 2000 points by the time the market closed on Monday.
Major developments of the day were-
- The number of deaths increased in the UK from 3 to 5. Both of them were facing health illness already and were at their 70s.
- Essential travel to the UK was waved off as the country put in all the efforts to bring back stranded tourists in Italy.
- 7 Brits tested positive for the virus. It is reported that all of them were flying with a 26 – year old woman who was already infected after traveling in Milan and Paris.
- Chief medical officer from England asked citizens with minor cough and cold to stay indoors at least for the next two weeks. It will help to sustain the spread of the virus.
- Republic of Ireland along with Germany announced relief funds worth billions of Euros in order to stabilize the economy.
The Vix volatility index which is also known as Wall Street’s fear meter recorded a steep spike which suggests that the market will decline further before it eventually picks up pace. Analysts suggest that the response to such a global financial crisis should be planned unitedly by all the countries. However, it is seen that every country is putting forward a protectionist policymaking approach which won’t be beneficial in the long run.
The silver lining remains that the major global banks are well prepared to boost the market in times of such financial debacle. The lending capacity of the banks is quite high until now, which ensures stability for business as well as personal finance.