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Dow Jones plunges into bear market after coronavirus declared pandemic – business live Dow Jones plunges into bear market after coronavirus declared pandemic – as it happened
(32 minutes later)
Disappointment over lack of action in Washington hits shares as Bank of England cuts interest ratesDisappointment over lack of action in Washington hits shares as Bank of England cuts interest rates
Time for a quick recap.
America’s Dow Jones industrial average has plunged into a Bear Market, after another day of wild drama and heavy losses. The Dow slumped by 5.8% today, taking it more than 20% below its record high of a month ago.
The losses were driven by rising concerns about a global recession, as the number of Covid-19 cases continues to rise worldwide.
American politicians have, so far, failed to come up with a stimulus plan to calm and reassure investors, even though the virus has been declared a pandemic.
Donald Trump is expected to speak about the situation later tonight, having met with bank bosses today- and promised to use “the full power of the Federal Government to deal with our current challenge of the CoronaVirus!”
In the UK, fresh losses took the FTSE 100 index down to a four-year low. It has now lost a fifth of its value in the last month.
The Bank of England became the latest central bank to ease monetary policy, by dramatically slashing interest rates at 7am. Bank rate was cut to 0.25%, a joint-record low, from 0.75%.
The BoE also tried to protect businesses and households from the coronavirus shock, with new schemes to encourage lenders to offer cheap loans to firms.
The move was part of a co-ordinated UK response, with chancellor Rishi Sunak announcing billions of pounds of fresh stimulus measures in today’s budget:
New GDP figures showed the UK had flatlined in the last three months -- fuelling concerns over the strength of its economy.
The president of the European Central Bank, Christine Lagarde: warned that the coronavirus outbreak will spark an economic downturn in Europe similar to the 2008 financial crash unless EU governments provide financial support for their economies.
The ECB is due to set monetary policy tomorrow -- will it take steps to support struggling Italy?
Goodnight. GW
There are pensive faces on Wall Street tonight, as the market turmoil shows no sign of ending:
The S&P 500 index narrowly avoided falling into a Bear Market tonight.
It still had a rough day, sliding by 4.9% to a one-year low of 2,741 points -- that’s 19% off its peak.
Some analysts believe the index will suffer further losses, as CNBC reports:
Meanwhile in Europe......Meanwhile in Europe......
Investors must feel like they’ve been chewed by a bear, given the scale of the sell-off in the last few weeks.Investors must feel like they’ve been chewed by a bear, given the scale of the sell-off in the last few weeks.
Here’s some reaction to the Dow Jones’s lurch into a bear market tonight:Here’s some reaction to the Dow Jones’s lurch into a bear market tonight:
Michael Corbat, the boss of Citi, has claimed that we’re not facing a financial crisis.Michael Corbat, the boss of Citi, has claimed that we’re not facing a financial crisis.
Speaking at a meeting of bank bosses with Donald Trump at the White House, he insisted:Speaking at a meeting of bank bosses with Donald Trump at the White House, he insisted:
Today’s rout underlines how concerned Wall Street is about Covid-19, especially now it has been declared a pandemic.Today’s rout underlines how concerned Wall Street is about Covid-19, especially now it has been declared a pandemic.
US investors want to see strong, clear steps from their leaders -- as we saw in the UK today, with the government announcing a stimulus programme and the Bank of England cutting interest rates.US investors want to see strong, clear steps from their leaders -- as we saw in the UK today, with the government announcing a stimulus programme and the Bank of England cutting interest rates.
The worry, though, is that Republicans and Democrats won’t agree what needs to happen.The worry, though, is that Republicans and Democrats won’t agree what needs to happen.
Quincy Krosby, chief market strategist at Prudential Financial, told MarketWatch.Quincy Krosby, chief market strategist at Prudential Financial, told MarketWatch.
She adds:She adds:
Boeing had a shocking day, and was a key reason the Dow slumped into a bear market tonight.Boeing had a shocking day, and was a key reason the Dow slumped into a bear market tonight.
The aircraft maker’s shares fell 18%, the worst performance on the index by some distance, after it announced it would fully tap a $13.8bn credit line, after suffering a jump in cancelled orders.The aircraft maker’s shares fell 18%, the worst performance on the index by some distance, after it announced it would fully tap a $13.8bn credit line, after suffering a jump in cancelled orders.
Chemicals maker Dow Inc slumped 10%, as fears of a global downturn refuse to abate.Chemicals maker Dow Inc slumped 10%, as fears of a global downturn refuse to abate.
Tech firms United Utilities (-9.9%) and Cisco (-7.5%) were also top fallers, along with American Express (-7.6%) and Procter & Gamble (-7.5%) - who will suffer if more Americans self-quarantine or simply shun the shops.Tech firms United Utilities (-9.9%) and Cisco (-7.5%) were also top fallers, along with American Express (-7.6%) and Procter & Gamble (-7.5%) - who will suffer if more Americans self-quarantine or simply shun the shops.
The Dow has fallen to its lowest point since January 2019.The Dow has fallen to its lowest point since January 2019.
That means more than a year of gains has been wiped out in under a month.That means more than a year of gains has been wiped out in under a month.
NEWSFLASH: The Dow Jones industrial average has officially fallen into a bear market, ending an 11-year rally.NEWSFLASH: The Dow Jones industrial average has officially fallen into a bear market, ending an 11-year rally.
The Dow has ended the day down 5.9%, after another day of heavy, anxious selling.The Dow has ended the day down 5.9%, after another day of heavy, anxious selling.
More than 1,464 points were ripped off the benchmark index, as it subsided to 23,553.22 points. That means it’s over 20% below February’s high, ending a run that began in 2009.More than 1,464 points were ripped off the benchmark index, as it subsided to 23,553.22 points. That means it’s over 20% below February’s high, ending a run that began in 2009.
The news that Donald Trump is giving a statement tonight could not drag shares higher, given the news that Covid-19 is now a pandemic.The news that Donald Trump is giving a statement tonight could not drag shares higher, given the news that Covid-19 is now a pandemic.
Newsflash: There are reports that president Trump will give a statement tonight on the coronavirus crisis, addressing the measures Americans should take:Newsflash: There are reports that president Trump will give a statement tonight on the coronavirus crisis, addressing the measures Americans should take:
Breaking: US president Donald Trump has vowed to use all the powers at his disposal to tackle the coronavirus, in a flurry of tweets:
America’s tech-focused Nasdaq index is also on the verge of a bear market tonight:
Earlier today, Swiss bank UBS warned that global stock markets could fall another 20%, if Covid-19 becomes a full-blown pandemic.
They estimate that shares only have another 5% to fall in an ‘intermediate’ scenario, while they could rally if the virus is contained.
Analyst Arend Kapteyn says:
So for equities, that means -5% and -20% losses in intermediate and pandemic scenarios, respectively.
More bad news for investors: the S&P 500 index is also heading into a bear market tonight.
Over in São Paulo, Brazil’s Bovespa Index has slumped by more than 10% today.
This triggered a circuit breaker, forcing trading to suspended for 30 minutes.
The energy, consumer cyclical and mining sectors are leading the sell-off:
With an hour’s trading to go, the Dow is sliding even further... down 6%, or 1504 points, at 23,513.
That would certainly put the index into a bear market, if it closes there at 4pm New York time, or 8pm UK time.
Democratic politicians are working on their own stimulus package, according to US political news site The Hill.
Anything passed by the House (America’s lower chamber) would then go up to the Senate, which is controlled by the Republicans.
However, there’s a problem.... both chambers are scheduled to hold a recess next week. So any economic relief legislation might not even reached Donald Trump’s desk until later in March.
U.S. Treasury Secretary Steven Mnuchin dampened hopes of a rapid, major stimulus package earlier today -- another reason shares are under pressure.
Mnuchin told lawmakers on Capitol Hill that a major economic stimulus package wouldn’t get through Congress quickly. So, it makes sense to start with a smaller measure designed to help small businesses and workers grappling with the coronavirus outbreak.
Mnuchin told House Appropriations subcommittee hearing.
Today’s slump has more than wiped out Tuesday’s gains, which followed Monday’s crash (the worst since 2008)
Today’s rout on Wall Street is being driven by a handful of coronavirus fears.
1) WHO’s decision to declare Covid-19 a pandemic is fuelling fears of a global recession
2) Doubts are building about whether the White House will deliver a stimulus package. Donald Trump’s pledge of a major package, including payroll tax cuts, seems illusive.
AFP explains: