Global Stock Markets Crash
FTSE 100, Dow, S&P 500 hasn't experienced this crisis since 1987.
Monday, March 9, 2020, is now the date of the worst stock market crash since 1987. Within the first 5 minutes of opening the market, a 7 per cent drop in stocks was noted. This called for a "circuit breaker" an incident which stops trade for 15 minutes. A stock market shut down.
Majority of analysts look to the negative coronavirus headlines as one reason for the crash. The pandemic has frightened people and contributes to the slowdown of the world economy. With more countries imposing their restrictions, people are going to be stuck inside their households not giving into economic activity. Small and Medium business owners will be the first to feel this impact and the UK will see small shops and cafes get seriously affected.
The World Health Organization continues to report an increase in confirmed cases with deaths all over the world. While China has reported lesser confirmed cases, Covid-19 cases have been popping up from different parts of the globe.
One other reason that analysts have pointed out is the panic in the oil market. A few days before March 9, and oil price war broke out. Since flights are being cancelled the demand for oil has decreased.
Photo by Loïc Manegarium
Notably, a clash between Russia and Saudi Arabia over production cuts caused the situation to get worse. Saudi Arabia has decided to ramp up its production (even in this time of lower prices) to position themselves globally.
At this point, investors and key players are looking to the government to step up and rescue the World Economy. Whether by a stimulus or opening the credit windows - the government needs to step in.
While there are varying opinions from analysts, the consensus is to remain calm. Don't pull out your investments and continue to buy.
To quote investment genius Warren Buffet:
"A climate of fear is their best friend. Those who invest only when commentators are upbeat end up paying a heavy price for meaningless reassurance."
