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World stocks set for worst week since 2008 financial crisis

Published 03/13/2020, 05:36 AM
Updated 03/13/2020, 05:36 AM
World stocks set for worst week since 2008 financial crisis

By Abhinav Ramnarayan

LONDON (Reuters) - World stocks were set on Friday for their worst week since the 2008 financial crisis, with coronavirus panic-selling hitting nearly every asset class and investors fretting that central bank action may not be enough to soothe the pain.

European stock markets were slightly higher on Friday on hopes governments will step up spending, but only after several sessions of sustained, heavy losses as investors faced the possibility of a global recession that could be prolonged.

Warning signs still flashed, with Italian government bonds tanking again on Friday morning, after suffering their worst day in nine years in the previous session.

Italy and Spain meanwhile imposed trading curbs, banning short-selling of dozens of stocks, to stem a market rout triggered by the coronavirus outbreak that saw European stock exchanges post their worst-ever losses on Thursday.

The MSCI world equity index (MIWD00000PUS), which tracks shares in 49 countries, hit a three-year low in Asian hours and is down 16% this week so far -- its worst run since October 2008 when Lehman Brothers' collapse triggered the global crisis.

"Markets are quite prepared for a period of falling output. The real fear is that you get second-round effects that result in a nastier, longer recession in the global economy," said Investec economist Philip Shaw.

"That is going to be very difficult to escape from given the monetary pedal is very close to the floor in many jurisdictions."

MSCI's main European Index was up 2.7% at the open, after having fallen more than 20% over the past week.

Earlier, Japan's Nikkei (N225) fell 10% before paring losses to close 6% lower. Australia's S&P/ASX200 (AXJO) had its wildest trading day on record, falling past 8% before surging in the last minutes of trade to settle 4.4% higher at the close.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) wobbled 0.1% higher by late afternoon after falling more than 5% in morning trade.

The slight recovery came as central banks from the United States to Australia pumped liquidity into their financial systems and as hopes grew that U.S. Democrats and Republicans could pass a stimulus package on Friday.

ITALIAN PAIN

There was no such recovery in Italian government bonds, with the benchmark 10-year yield -- which moves inversely to price -- rising another 16 basis points in early trade. (IT10YT=RR)

The yield had leapt by 55 bps on Thursday -- its worst day since November 2011, near the peak of the euro zone debt crisis -- after the European Central Bank kept rates steady and put the onus firmly on governments, sending markets into a tailspin.

Italy is one of the worst-hit countries in Europe from the spread of coronavirus, with the death toll shooting past 1,000 people and the government ordering blanket closures of restaurants, bars and almost all shops.

Oil (LCOc1) steadied on Friday, after having dropped 7% on Thursday on U.S. President Donald Trump's surprise travel ban and on a flood of cheap supply coming into the market from Saudi Arabia and the United Arab Emirates.

Major currencies stabilised after furious dollar buying overnight, with the euro (EUR=) finding a footing around $1.1200 and the Aussie AUD=D3 recovering to $0.6300.

Latest comments

Money fluency in market now is making the problem worsen in future. Preparation for additional hospital bed and medical worker, and care the infected people, then fear will be gone slowly. Think about China, and South korea, the most brutal public fear was short of medical support, and it led people be scared. In South Korea, short of bed, some of patient forced to quarantine at home without medical support, and finally he passed away on going to hospital in ambulance. Please focus on emergency medical system first, after then market will be in right position natually. Money power is needed at that time too.
no Mr.Ogun it's the beginning
lol worst is over. with this move, markets will calm down but i dont think they will start going up immediately so i'll be rushing divident stocks.
March 12 :"Recession risks escalate" March 13: "Bullish reversal after worst week since 09 financial crisis." Anyone places their hard earned cash into these stocks may the force be with you.
Traders where just hungry for anything that can/will provide directional bias...
#sale bannedAs long as you didn't sell, you didn't lose or profit...
Actually I did make a profit through dividends :).
Human believes what he want to believe, not the truth, especially when he facing the disaster. Money liquidity in not a proper plan over coronavirus spreading. Unfortunately people will know that very soon. Trigger is already pulled.
It's a matter of time, any country failed in precaution of virus, virus will spread very very quickly like China. Even A communist country China could not quarantined people at right time. Can it be done by democratic U.S or other G7? I Do not think so. Another market drop and burst out of corona are scheduled. It is only a matter of time.
lol covering shorts buddy?
This is the time to buy Microsoft, Apple, Facebook, Amazon etc. We'll never get them at these prices again. :)
Dear, save your cash now for later. It's just a starting of bear market.
North Korea shoots people in the head that have Corona Virus. That's what the US needs to do here with politicians that care about nothing but finances and manipulating markets.
Hahaha wish the investors good luck with their hopes
Money liquidity is not a right answer for this crisis. medical detailed action plan and end of oil price war are needed. As concerns about case in China and South Korea, Virus antway will spread quickly, and makes a lot of casualties. And market has to face tragic plunge in market again.
anyway spreading very very quickly, and upcoming the rocketed number of patients and casualties will lead market a historical plunge. Without agreement of Russia and Saudi arabia in oil price war, no positive reaction can be done in market.
yezzir. they're only going to ***the bubble bigger and more susceptible to a pop.
After this coronavirus caicos, we have to handle the depressed, squized global economy. At that time maybe money liquidity wii be needed so desperately. But now? no way.
Usd just the last best house of cards. When that one loses confidense look out
People staying at home, this one is too big to save, no way so save banks, and airlines, and restaurants, and hotels and shopping malls and and and
Thousands of people are dying everyday of malnutrition.Thousands of people dying everyday of Cancer.Heart Attack.diabetes and recently of Influenzain U.S.A.Why somuch Fuss ofcoronavirus where thefatality is not even 5 percent.Media and Politicians are distractinginnocent people.
Cancer heart attack diabetes are source of income for entire health industry without affecting the other economic sector.. Which is certainly not d case with covid 19
 wait for it... ;-)
This virus could have easily been some dude in Seattle, went hunting for squirrel, raccoon, or deer, caught the virus, then fly to Wuhen, infected a bunch of people there then come back home. Prove to me that this can't happen.
weren't you in my toilet yesterday fishing up my poo? prove to me it wasn't you
This so called crisis is more about social engineering than anything else. Progressively turn the masses into compliant sheep.
 sound great if they are trumpard
 thats what the target is......wipe the masses,,,,,
 ;)
i thought that guy was actually doing the harakiri
Reminds me of the gif where the guy is on fire and his comment is "everything is fine"
FairwayTradeEducation and tradingNo the real newsNO BIASAll Education
Panic is overwought, short stocks are the play till greenFairwayTrade
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