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Market round-up: the bears are roaming globally

By Philip Smith

Falling markets stretch from east to west, from equities to commodities and even cryptocurrencies in ‘the worst week since the 2008 financial crash’

Green was nowhere to be seen as global shares had their worst week since the coronavirus crisis began. Some say this has been the worst week since the 2008 financial crash. And after months of very bad weeks, that’s quite a claim.

Add all the bad weeks together and the situation is, well, interesting.

We are very deep into bear market territory. Asian shares started today’s big falls; 3.67 per cent for the Nikkei and 2.42 per cent for the Hang Seng. It was a 3.64 per cent drop for Bombay’s BSE Sensex. The Shanghai Composite fell 3.71 per cent.

European shares followed, again plunging. The DAX (Germany) by 3.86 per cent, CAC 40 (France) 3.38 per cent, Ibex 35 (Spain) down 2.92 per cent the AEX (Netherlands) by 3.68 per cent.

The FTSE sank to its lowest level since 2016 dropping 3.18 per cent – or 215.79 points – to 6,580.61 at close. Six weeks ago it was at 7674.

And so it continued into the US. The Dow Jones opened down even after yesterday recording its worst day yet. At 5pm it down 3.62 per cent. S&P 500 down 3.5 per cent and Nasdaq down 2.72 per cent.

To many, it’s an over-reaction yet investors are fearful of the impact a sudden and dramatic drop in demand for a range of goods and services will have on company performance. Once the bandwagon rolls, it picks up momentum.

Firms are already warning investors of the lower-than-expected revenues/profits/growth due to the fall-off in demand. Even those big enough to survive the greatest of upsets are starting to look worried; both Apple and Microsoft have said their business will be affected.

US investment bank Goldman Sachs has warned that it now thinks the coronavirus will wipe out any growth in US company profits this year.

BA owner IAG was the latest big passenger carrier to say the future is uncertain but one thing is for sure; revenues will be down – a message previously delivered by Cathay Pacific, Singapore Airlines and Lufthansa.

If the big guys are affected, then the plethora of mid-sized firms trading on the markets will be hit. As supply chains falter, customers stop buying and stock levels fall.

“What we are picking up with some of our bigger companies and companies around the world is that supply chains… are getting a little tight,” said former Bank of England governor Mark Carney. “That’s lower activity.”

Oil? The benchmark oil price, which had been as high as $70 a barrel in early January, is already down to $50 a barrel. At 5pm, the price of Brent Crude was down a further 2.95 per cent and WTI 4.37 per cent.

Demand is collapsing and bringing the price with it. As reported here OPEC and other members are considering drastic cuts in supply to compensate.

Natural gas was trading 3.17 per cent down at 5pm.

The red screen extended into the crypto territory where, against the dollar, Bitcoin was down 1.18, Ethereum 0.78 per cent and Litecoin at 2.1.

FURTHER READING: Nasdaq 100 Forecast: March 2020 is likely to be a very choppy month

FURTHER READING: Bear market meaning

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