Economic turmoil associated with the 2019–20 coronavirus pandemic has a wide-ranging and severe Financial impact upon markets, including stock, bond, and commodity (including crude oil and gold) markets.
The financial impact of coronavirus pandemic
Major events included a described Russia–Saudi Arabia oil price war after failing to reach an OPEC+ agreement that resulted in a collapse of crude oil prices and a stock market crash in March 2020. The effeswq12cts upon markets are part of the coronavirus recession and among the many socio-economic impacts of the pandemic. This article is brought to you by Car Loans of America.
Financial risk and country risk
As coronavirus put Europe and the United States in virtual lockdown, financial economists, credit rating and country risk experts have scrambled to rearrange their assessments in light of the unprecedented geo-economic challenges posed by the crisis. M. Nicolas Firzli, a director of the World Pensions Council (WPC) and advisory board member at the World Bank Global Infrastructure Facility, refers to it as “the Greater Financial Crisis” and says it is bringing to the surface many pent-up financial and geopolitical dysfunctions:
“So far, the only European countries forced to put in place short-selling bans are Italy, Spain, and France: three of the four largest economies in the enfeebled European Union.” He believes the financial vulnerability of Madrid, Milan, and Paris is due to an often-overlooked geo-economic reality, which could come to the fore in the coming days. “By OECD standards, Spain, Italy, and France have very weak pension assets bases. Their combined pension wealth is more than 15 times smaller than that of jurisdictions such as the UK or Australia. In times of acute crisis, like today, they lack cash-rich domestic buyers of last resort for the bonds and equities traded on their financial markets. Their national economies will suffer as a result, and their political sovereignty itself may be severely eroded.”
Financial Impact and Economic Crisis
At the international and national levels, however—as Helmut Ettl, head of the Austrian financial market authority, said—there is no reliable empirical data to gauge the ongoing effects of the COVID-19 disease on the economy and the environment, as this type of crisis is unprecedented. Companies that were already financially weak before the crisis are now further destabilized. All that is known, Ettl said, is that the crisis will be profound.
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Corporations’ response to the health risk
As required by regulation, large American banks are reviewing emergency plans to ensure that they can continue to operate if conditions worsen. Contingency plans include having employees work from their homes, transferring staff to backup offices. And even sending staff to offices in other cities. Goldman Sachs canceled all “non-essential” travel. And put in place specific restrictions on travel to China, South Korea, Italy, and Iran. Amazon, who confirmed an employee in the Seattle area tested positive for COVID-19, banned nonessential employee travel.
Large technology companies have also made changes. Twitter “suspend[ed] all non-critical business travel and events”. Facebook canceled its F8 developer conference. Some companies, including Microsoft, GitHub, and Square, Inc., have also encouraged employees to work from home.
Other major corporations have reduced their business activity or otherwise modified their business practices. Nike closed its Oregon headquarters and its European headquarters in Amsterdam “out of an abundance of caution. Read more about Car Loans at https://www.bbntimes.com/companies/budgeting-101.
Stock market
On Monday, 24 February 2020, the Dow Jones Industrial Average and FTSE 100 dropped more than 3% as the coronavirus outbreak spread worsened substantially outside China over the weekend. This follows benchmark indices falling sharply in continental Europe after steep declines across Asia.
The DAX, CAC 40 and IBEX 35 each fell by about 4% and the FTSE MIB fell over 5%. There was a large fall in the price of oil and a large increase in the price of gold. To a 7-year high. On 27 February, due to mounting worries about the coronavirus outbreak, various U.S. stock market indices including the NASDAQ-100, the S&P 500 Index, and the Dow Jones Industrial Average posted their sharpest falls since 2008, with the Dow falling 1,191 points, its largest one-day drop since the 2008 financial crisis. On 28 February 2020, stock markets worldwide reported their largest single-week declines since the 2008 financial crisis.
Following the second week of turbulence, on 6 March, stock markets worldwide closed down (although the Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 closed up on the week), while the yields on 10-year and 30-year U.S. Treasury securities fell to new record lows under 0.7% and 1.26% respectively. U.S. President Donald Trump signed into law an emergency appropriations and pandemic countermeasures bill including $8.3 billion in government spending. After OPEC and Russia failed to agree on oil production cuts on 5 March and Saudi Arabia and Russia both announced increases in oil production on 7 March. Oil prices fell by 25 percent. Learn more about Car Loans at https://en.wikipedia.org/wiki/Car_finance.
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