New York (AFP)
Faced with the relentless spread of the coronavirus, a panic movement seized the world's stock markets. To stop it, the hypothesis of an outright closure of the financial markets has started to be raised. But authorities and operators reject this idea for the time being.
"We intend to leave the markets open," said US Treasury Secretary Steven Mnuchin on Tuesday at a press conference.
"Americans must know that we will do everything to ensure that they can access money in their bank accounts and in their retirement savings plan," he said. The official did not completely rule out the idea of possibly shortening the Wall Street session.
Exceptional measures have already been put in place in the United States to try to limit the panic, including "circuit breakers".
This system provides that trading is suspended for 15 minutes when the S&P 500 index drops more than 7%, the time for investors to recover. It has already been used three times in the past six sessions.
If the index representing the 500 largest companies on Wall Street dropped 13%, a second stop of the same duration would take place. If he lost 20%, the session would be suspended.
Some observers would however like the authorities to go further and decide to completely "disconnect the markets". Even prepare for it.
"Beyond the movements triggering the circuit breakers, the volume of trade is low and volatility high," said Stephen Innes, head of market strategy at AxiCorp.
"In the end, the losers are the hard-won retirement plans of some workers and those whose retirement is postponed by five to ten years," he said.
"We have already been anticipating a possible market closure for a few days internally," said Christopher Dembik, head of economic research at Saxo Bank.
If such a decision was made, it would rather come from the United States, where the continuing fall in the indices - the Dow Jones has already lost almost 30% since mid-February - could force the hand of political leaders, he said. . Mr. Mnuchin seems to have put an end to this hypothesis for the moment.
- Fuel anxiety -
Closing for a few days, like during the Great Depression of 1933 or after the September 11 attacks, would not solve the problem, concedes Mr. Dembik.
The spread of the pandemic, and all the uncertainty it generates, "is not going to stop for a few weeks and it is unimaginable to be on a scenario like in 1914, when the New York Stock Exchange had closed for four months and half".
Like Mr. Mnuchin, the main players in the stock market in the United States have also ruled out this idea.
"The markets must continue to function in periods like the ones we are currently experiencing," said the boss of the American authority for the financial markets (SEC), Jay Clayton, on CNBC on Monday.
The boss of the New York Stock Exchange, the legendary stock exchange on Wall Street, also stressed the importance of continuing to sell and buy stocks.
"Even though we are fully aware of and are sensitive to investors' concerns about falling prices, the market only reflects the uncertainties everyone faces in these difficult days," wrote Stacey Cunningham. on Twitter.
"Closing the markets would not change the underlying causes of the fall in prices, would no longer allow a transparent reflection of the mood of investors and would reduce investors' access to their money," she added. . It would only "fuel anxiety".
It would be irresponsible to close the market "whenever you don't like the direction it takes," said Quincy Krosby, head of market strategy at Prudential Financial.
However, it argues for a more careful examination of the role of high-frequency and fully automated brokerage. "The scale and speed of the movements is so important, upwards and downwards, that many complain about it," she notes.
© 2020 AFP