Bloodshed Around The World
The coronavirus is taking a huge toll across the globe in terms of both human life and the economic status of many countries with massive slumps in the markets.
The coronavirus is taking a huge toll across the globe in terms of both human life and the economic status of many countries with massive slumps in the markets. Here is an update of the crisis that has been taking new turns each passing day.
The markets continue to witness the pressure of the impact of corona virus on global economy as new infected cases continue to rise globally. The United States of America has already reported more than 10,000 infected cases whereas Italy has been reporting more than 500 deaths each day. So far the death toll for a single day reported by Italy is the worst; it has even surpassed that reported by China. Globally everyone has realised that what started as an epidemic in just one country in the continent of Asia has soon become a very serious pandemic with probably extreme long-lasting after-effects.
During the fortnight, markets globally continued to witness a fall as panic among investors increased following the uncertainty of the end of corona virus. Moreover, markets failed to experience any confidence in the revival of the economy. Majority of the countries announced complete lockdown, banning arrival of any international flights across their borders, and if allowed, the passengers have to undergo strict medical screening. This was expected to severely impact businesses all over the world, and that is what has happened. A few experts have suggested that with such impositions, if the aviation and tourism industry doesn’t receive any financial support, it may go bankrupt by end of May 2020.
US indices such as Dow Jones Industrial Average (DJIA), S&P 500 and NASDAQ have plunged by 22.05 per cent, 18.54 per cent and 13.71 per cent respectively. US President Donald Trump has been playing all his cards to restrict the fall of indices and keep the panic among investors to a minimum. US Federal Reserve slashed its key interest rate back to near zero along with restarting bond buying so as to ensure economic growth and liquidity in dollar lending. This contrarily created a fear in investors since a 100 points rate cut by US Federal Reserve is thought to depict the severity of the virus’ impact on the economy rather than cheering investors.
The current economic situation is considered as one of the worst-hit economic situation after the 2008-09 financial crisis, which has resulted into various companies laying-off contractual workers. Thus, data has showed an increase in the number of Americans filing for unemployment benefits during the period of last few weeks. New York Stock Exchange’s owner, Intercontinental Exchange Inc., said the market would temporarily close its trading floors and move fully to electronic trading starting from March 23, 2020.
As British Prime Minister Boris Johnson announced that all pubs, bars and restaurants in the United Kingdom would remain shut and an Italy-style complete lockdown would be implemented if the residents flouted advice to stay indoors. This has added to the continuous decline of FTSE 100 fell by 16.29 per cent during the fortnight since the index which consists of a significant number of oil and gas, financial and industrial companies is not only exposed to the effects of coronavirus but also that of the recent Russia and Saudi Arabia oil war which was triggered by Saudi Crown Prince Mohammad Bin Salman’s decision to ramp up the country’s oil production by nearly three million additional barrels per day. As a global domino effect, other European indices such as DAX and CAC 40 also dropped by 17.73 per cent and 16.86 per cent respectively. Asian indices continued to tumble day after day as well with Hang Seng falling by 13.36 per cent and Nikkei down by 14.27 per cent.
China has been reporting less newly infected cases but mostly imported cases in the country for the last few days. With most of the firms resuming business operations in China, the country has been extending a helping hand to other affected countries globally. The Shanghai index witnessed a fall of 9.62 per cent in the last few weeks.
Domestic indices Sensex and Nifty continued to spiral down as well since the Indian government continues to announce new restrictions being imposed to protect the country from massive spreading of Covid-19. After imposing restrictions on travel to and from a few countries, a complete ban on international travel was announced from March 22, 2020. Meanwhile, as the Indian residents positively responded to the ‘Janata Curfew’ announced by Prime Minister Narendra Modi, around 30 states and one Union Territory announced lockdown in their respective areas, which must be followed strictly. From the lockdown are exempted stores and facilities of essential services as well as print and digital media, even then not more than 4-5 people should be seen together at one place. Along with this, private vehicles are not allowed to ply unless for extremely essential purposes. With such a massive lockdown being implemented, the manufacturing facilities of a majority of the companies are affected as operations there are discontinued, and they need to be kept shut.
Even though courier services such as Amazon and Flipkart are allowed to run, a disruption in travel has forced them to delay their operations. Similar is the case for essential e-commerce grocery firms such as Big Basket and Groffers who are also running on low capacity. Cab services like Uber and Ola have kept their services to minimum or have discontinued operations in some places. As an impact of this, sectoral indices
Even though courier services such as Amazon and Flipkart are allowed to run, a disruption in travel has forced them to delay their operations. Similar is the case for essential e-commerce grocery firms such as Big Basket and Groffers who are also running on low capacity.
continued to tumble down as well with Midcap index and Smallcap index registering fall of 28.35 per cent and 30.52 per cent respectively. The already sunken down Auto index was down by 29.54 per cent as uncertainty loomed over its products’ global and domestic future consumptions.
Amongst sectoral indices, Bankex and Realty slipped the most by 36.30 per cent and 31.66 per cent followed by 27.21 per cent. Subsequently, Metal, IT and Power indices were also down by 27.21 per cent, 23.03 per cent and 21.49 per cent respectively. Brent crude oil price fell by 14.75 per cent at USD 29.29 per barrel on March 23, 2020, from USD 34.36 per barrel as on March 9, 2020. It has plummeted by 43.56 per cent, from USD 51.90 since the beginning of the month. The price of gold fell by 6.34 per cent to Rs. 42,430 for 10 grams of 24 carats in the last 15 days and by 2.39 per cent since the beginning of the month. On March 22, 2020, the Indian rupee touched a record low of 76.32 against the US dollar.
The data showed an outflow of FIIs to the tune of Rs. 43,962.3 crore whereas DIIs showed an inflow to the tune of Rs. 35,150.41 crore.