Coronavirus: Full panic in markets

Global stock markets are crashing, and trading at Wall Street has been temporarily halted. The crash is correlated to coronavirus, but this specific one has more characteristics, in the opinion of Yohay Elam from FXStreet.

Key quotes

“Trying to forecast the trajectory of the global economy becomes harder as events develop at a break-neck speed. Analysts dismissed a US recession, and now there are growing individual voices. However, some see only a temporary shock followed by a V-shaped recovery.”

“The Italian government locked down 16 million people, including Milan, its second city. The drastic measures are causing chaos.” 

“The US economy has had issues with testing kits for coronavirus and is catching up only now. It has also refrained from transport limits, and most large events continue as planned.”

“The Fed is one of the only central banks that has ammunition – it entered the crisis with an interest rate of 1.75%. While the Fed can continue cutting rates, there is little hope that prevents a further fall as cutting rates modestly help the economy.” 

“Saudi Arabia and Russia have fallen out on Friday. The Saudis took the extra step in launching an all-out price war with Russia, lowering its rates for the black gold and ramping out production. The move has sent oil prices tumbling down, and it could yet have greater damage.”