Financial Watch: Global stock markets stage a shocking week or future shocks

Xinhua News Agency, Beijing, March 14th : Financial observation: Global stock markets stage a shocking week or the future will continue to fluctuate

Xinhua News Agency reporter Fan Yu

With the worldwide spread of the new crown pneumonia epidemic and the uneasiness of financial markets pervading, global stock markets have experienced a thrilling week this week, with slumps and meltdowns frequently taking place. Analysts believe that the successive introduction of measures by central banks and governments in various countries can alleviate the impact of the epidemic and appease market sentiment to some extent, but market volatility may continue until the epidemic is contained.

After the global stock markets suffered a "fuse tide" on the 12th, European and American stock markets rallied on the 13th. The three major New York stock market indexes ended a "roller coaster" week on the 13th. The Dow Jones Industrial Average rose 9.36%, the S & P 500 index rose 9.29%, and the Nasdaq Composite Index rose 9.35%.

US stocks triggered the fusing mechanism twice in history this week. After the World Health Organization announced on the 11th that the new crown pneumonia epidemic situation has the characteristics of a global pandemic, and the US government introduced measures to limit travel to Europe, the market panic has increased significantly. All three major stock indexes fell into a technical bear market on March 12, ending an 11-year bull market cycle. On the 13th in anticipation of the government's stimulus policy, the market stopped falling and rebounded. Nonetheless, the three major stock indexes have fallen more than 20% from their highs for the year, and all have fallen more than 8% this week.

This week, the stock markets of many countries fell more than 20% from their highs this year, falling into a "technical bear market." With the outbreak of alarms in many European countries, European stock markets have become the hardest hit. In the first 4 trading days, all three European stock indexes fell across the board. On the 13th, after Italy, Spain, the United Kingdom and other countries introduced measures to restrict short sales, the three major European stock indexes opened higher across the board. The average price index of 100 stocks in the London Financial Times, CAC40 in Paris, France, and DAX in Frankfurt, Germany increased by 2.46%, 1.83%, and 0.77%, respectively.

In the Asia-Pacific region, the stock markets of India, South Korea, Thailand, the Philippines and other countries melted out on the 13th. The Tokyo stock market ended the week with a 6% plunge on the 13th. The Nikkei stock index closed at its lowest point in more than three years. The South Korean Composite Index fell 3.4% on the day and has fallen 13.2% this week. After the central bank moved to appease the market, the Australian benchmark S & P / ASX200 index fluctuated violently, eventually rising 4.4%, and the Indian stock market closed 4% higher.

Analysts believe that the main cause of the current round of US stock market plunge is the accelerated spread of the new crown pneumonia epidemic globally and the continuous escalation of control measures, and the US government's economic stimulus measures are less than market expectations. At the same time, the epidemic also exposed the inherent vulnerability of the US stock market bull market. Driven by loose monetary policy, US stocks experienced a "long bull", accumulated a large number of profitable disks, and there was a need for adjustment.

The market is worried that the spread of the epidemic will drag down global economic growth, and it is hoped that the central bank and the government will introduce large-scale measures to boost the economy.

Recently, the central banks of Australia, the United States, Canada, Malaysia, the United Kingdom and other countries have announced interest rate cuts in order to support the economy and prevent risks. In addition to the emergency cut of 50 basis points by the Federal Reserve in early March, the US Federal Reserve also invested more than one trillion dollars in liquidity on the 12th and 13th. Both parties in the US Congress are nearing agreement on a stimulus package.

On the 12th, the European Central Bank decided not to cut interest rates for the time being, and chose to inject additional liquidity into the euro zone through measures such as expanding quantitative easing, using liquidity tools and flexible banking supervision.

Analysts believe that the central bank's interest rate cuts will help ease market tensions, but there are limitations in fighting the impact of the epidemic on the economy and the need for government fiscal policy.

European Central Bank President Lagarde said that as of now, the total fiscal stimulus announced by the euro zone countries is about 27 billion euros, which only accounts for about 0.25% of the euro zone's GDP. She called on countries in the euro zone to adopt strong and coordinated fiscal responses to support businesses and workers at risk.

After experiencing the "darkest moment", how to take the next step in global financial markets has become the focus of attention. Analysts believe that the market will pay close attention to the development of the epidemic and the response measures of various countries, and the alarm that the epidemic has sounded has not yet been eliminated.

Some market analysts have warned that the current round of adjustments in US stocks is far from over, and there will be more shocks next. "We are witnessing the end of the bull market." The fall of US stocks into a bear market will exacerbate market concerns that the US economy is in recession, and the duration of the bear market will largely depend on the effectiveness of the government's response to the epidemic.

UBS analysis believes that unless the spread of the epidemic can be effectively contained and global policymakers adopt coordinated responses, the market will continue to fluctuate significantly.