World markets have recently plunged, with all stocks ranging from the cryptocurrency market to the NASDAQ / S&P market hit by the Coronavirus scare. This had a ripple effect across different industries, with investors having to watch their assets dissolve in front of their eyes.
Stocks crashed mainly due to the decision of the United States to ban travelers from Europe for a period of 30 days. The government has taken the move to contain the spread of Coronavirus from hotspots in Europe.
The MSCI global gauge of stocks posted its largest daily percentage drop on record along with its European counterparts. The DJI, Wall Street’s Dow industrial index fell by the biggest margin since the Black Monday crash of October 1987. This financial atmosphere has been so bearish that several world governments decided to increase liquidity into their systems.
The New York Federal Reserve pumped more liquidity to banks so that they could reverse a few losses. Increasing repo rates have been a sign of market dips, and investors have been careful to look out for them. However, the dollar surprised everyone by rising against other national currencies.
At the same time, oil fell further to close a week of losses. ‘Liquid gold’ has fallen more than than the past two decades with no signs of stopping.
Markets took a turn when Donald Trump imposed travel restrictions on people coming in from Europe. The impact was so massive that trading was halted or 15 minutes shortly after it opened in the NYSE.
The S&P 500 fell by 7 percent with the day closing at a 9.5 percent fall. Zhiwei Ren, the managing director at Penn Mutual Asset Management claimed that the threat of recession was imminent.
John McClain, a portfolio manager at Diamond Hill Capital in Columbus, Ohio stated:
“Fear of the unknown is gripping markets and it’s more impactful in the credit markets at the moment; liquidity has effectively evaporated. People are looking ahead and saying ‘What’s this world going to feel like when we’re all working at home?”
The ECB has dropped capital requirements to allow the banks in the eurozone to cope with Coronavirus. This move did not last long as the ECB held interest rates on hold, which disappointed the markets.
The cryptocurrency market suffered the most with Bitcoin freefalling more than 35 percent in the last 24-hours. At the time of writing, Bitcoin was trading for $5816 with a total market cap of $106.264 billion. This was after a 3.8 percent increase in price which brought the $73.789 billion. Bitcoin’s performance has also elevated the value of other altcoins such as Ethereum and XRP on the charts.
