The Dow Jones Index of the Wall Street Stock Exchange lost almost 33% since the first fatality due to coronavirus in the US was known.
The Dow Jones Index of the Wall Street Stock Exchange has lost almost 33% since the first coronavirus fatality in the United States was known., while the expanded indicator S&P 500 fell almost 29% and the technological Nasdaq slightly more than 23%.
The losses recorded in March –after the first death in that country, on February 29-, reflect not only the virulence of the health crisis on the world economy, but also the effects that it may have over time on supply and global demand.
The oil market is a true reflection of what the coronavirus can cause in the markets, beyond the price war that Russia and Saudi Arabia are fighting.
Supply was also affected due to the abrupt cut in world trade, which placed the supply of inputs among the most affected sectors.
The crisis exposed the weakest side of globalization and its commitment to the use of cheap labor, without measuring the consequences: Chinese development, based on the use of low labor costs, reached superlative levels until the end of 2019 and attracted as a magnet to major world corporations.
Global companies moved much of their production to China, and that ended up creating the world’s largest manufacturing empire, both for finished goods and intermediate inputs, according to Telam.
The pandemic exposed system failures: Today you need drugs, drugs and medications that in most cases are produced there.
Conversely, Chinese plants require the high technology that is produced in the West for the production of vehicles or medical devices and, due to the abrupt cut in international trade, production was halted, which had an impact on employment.
It is estimated that only in the United States the requests for unemployment benefits will increase this month to double the rate at which they had been growing, despite all the stimuli that US companies received during the presidency of Donald Trump.
Hence, the monumental financial aid launched by the White House is still considered scarce to begin to neutralize the effects of the pandemic.
A report by the Moody’s credit risk agency realizes that “a sharp contraction in the global economy, at least in the second quarter, seems imminent. “
The uncertainty will remain for several months, the rating agency predicted, and it will take “at least several months to determine how long it will take to contain the spread of the virus and how companies and households will face losses in their financial results.”
The agency explained that “the volatility of the financial market is at the levels that last occurred during the 2008 crisis.”
The VIX index prepared by the Chicago Market, which precisely measures volatility and instability in the North American stock markets, scored 40 points on February 28 when the Covid-19 crisis struck the first blow in the US and reached 83 points on “black” Monday of March 16, to close the week at 66 points.
The strong swings showed the bewilderment between operators and investors, at a time when all the governments of the world are launching aid packages to cushion the blow.
Trump, who was playing re-election in November this year, launched a financial assistance package for a trillion dollars, to which were added the rescue lines launched by the Federal Reserve to rescue debt from companies, states and municipalities, and The Senate is expected to approve more financial aid Monday.
“I want to get money for the workers,” Trump said, adding that if there is not enough money in this stimulus round, “we will do something later, I’m sure.”
For now the impact of the virus reaches markets around the world: the S&P 500 index fell to its lowest level in three years; the European Union said this year’s recession could be as bad as 2009; and Goldman Sachs warned that the US economy could shrink by no less than 24% yoy in the second quarter.
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