Xinhua News Agency, Beijing, March 13th, Financial and Economic Observations: Multinational stock markets are now experiencing "melting tide"
Xinhua News Agency reporter
Due to the continued spread of the new crown pneumonia epidemic, the global panic was intensified. On the 12th, a number of major global stock markets triggered a fuse mechanism to suspend trading, and dozens of stock markets entered a "technical bear market."
Experts believe that the future trend of the market mainly depends on whether the epidemic situation can be controlled as soon as possible. Until the epidemic situation is effectively controlled, the high volatility of financial markets may continue.
On the 12th, the US, Thailand, the Philippines, South Korea, Pakistan, Indonesia, Brazil, Canada and other at least eight countries' stock markets triggered a fuse mechanism. Among them, the U.S. stock market triggered the fuse mechanism for the second time in a week, and the third time in the history of the U.S. stock market.
At the same time, according to incomplete statistics, as of now, more than 30 stock markets worldwide have entered a "technical bear market." The so-called technical bear market refers to the fact that the stock index has fallen more than 20% from its recent high, and technically established a bear market.
European stock markets have become the hardest hit, with major stock indexes in Greece, Italy, Poland, Russia, and Austria falling more than or close to 30%.
For U.S. stocks, the closing prices of the Dow Jones Industrial Average, the Standard & Poor's 500 Stocks Index and the Nasdaq Composite Index on the 12th have fallen by 28.3%, 26.7%, and 26.6%, respectively, compared with the all-time highs set in February. 11-year bull market cycle.
The continued spread of the new crown pneumonia epidemic globally has triggered investor panic and is the main reason for the recent global stock market turmoil. The Chicago Board Options Exchange Volatility Index (also known as the "panic index"), which measures investor panic, soared to 76.83 points at noon on the 12th, close to the historical extremes set during the 2008 international financial crisis.
The market is generally worried that if the epidemic situation is not controlled as soon as possible, it will cause a major blow to the global economy, and developed economies such as Europe and the United States will even fall into recession.
The US economic recession has been under discussion since last year. At that time, the reason for the recession given by economists was that the US economy was at the end of the business cycle. According to economic principles, the US economy may not escape the fate of the recession in the past two years. This year, the new crown pneumonia epidemic emerged suddenly, spreading rapidly around the world, eroding the foundation of the US real economy from various fields and channels such as financial markets, industrial chains, and consumption, and cracking down on economic growth confidence. There are fears that the outbreak could block US economic expansion.
Many institutions and economists have given pessimistic forecasts of the US economic outlook. According to the economic model established by Bloomberg, the probability of a recession in the US economy in the next year rises to 53%.
The European economy is also not optimistic. As Europe's largest economy, the German economy is facing a risk of recession. The well-known German think tank Kiel Institute for World Economics on the 12th lowered Germany's economic growth forecast for this year by 1.2 percentage points. It is expected that the German economy will experience a negative growth of 0.1%.
From a global perspective, this year's world economic growth may slow down significantly. The Organization for Economic Cooperation and Development predicts that the world economy will grow by 2.4% this year, which is 0.5 percentage point lower than the value predicted in November last year.
International Monetary Fund spokesman Gerry Rice said that the severity of the slowdown in world economic growth depends on the duration of the epidemic and the response of national authorities, and there is still considerable uncertainty.
Regarding how long the global financial market turbulence will continue and whether market conditions will further deteriorate, analysts generally believe that this mainly depends on the situation of epidemic prevention and control, and the signal that the market bottomed out should come from the spread of the epidemic rather than economic data.
UBS expects that high market volatility will continue until evidence of successful epidemic control, the impact of the epidemic on the economy becomes clear, or coordinated responses by global decision makers. (Participating reporters: Xu Yuan and Liu Yanan)