US stocks fall 12 per cent – the worst drop since 1987 crash
The S&P 500 staggered lower making it the biggest single-day loss since the crash of October 1987
The S&P 500 index of US stocks fell 12 per cent after an emergency rate cut by the Federal Reserve, as the US and other countries globally imposed stricter rules on public lockdown due to the coronavirus pandemic.
The S&P 500, the benchmark for the US equity market, staggered lower in the final minutes of trading, making it the biggest single-day loss since the crash of October 1987.
The Nasdaq Composite also had its worst day ever, down 12.3 per cent.
The Fed cut US interest rates by a full percentage point on Sunday, restarted its programme of quantitative easing and introduced new measures to improve market liquidity including the purchase of $700bn of US Treasuries and mortgage bonds.
The Bank of Japan followed the Fed’s actions by announcing it aimed to double its purchases of exchange traded funds to ¥12tn ($112bn) a year. However, the central bank left its key policy rated unchanged at -0.1 per cent. Japan’s benchmark Topix closed 2 per cent lower after the announcement.
In other Asia-Pacific markets, Australia’s S&P/ASX 200 index was 9.7 per cent lower while Hong Kong’s Hang Seng index fell 4 per cent and China’s CSI 300 closed down 4.3 per cent.
US President Donald Trump has urged people in the US against unnecessary travel and gathering in groups of 10 or more.
Also on Monday, France said people would be allowed to leave their homes only for essential trips, and Canada closed its borders to most foreigners.
In Europe, the UK’s FTSE 100 fell 4.7 per cent to its lowest level since 2011 and the Stoxx Europe 600 index fell 4.9 per cent.
Airline stocks were especially hit hard. British Airways parent IAG plunged 27 per cent in the UK, while US carrier United Airlines was off 15 per cent.
At the same time, oil prices plunged as the pandemic started to hit demand in Europe and North America. Brent Crude fell more than 10 per cent to just below $30 a barrel, breaching that level for the first time in four years.
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