Selling in US stocks resumed and European equities reversed rallies with investors pining for a policy response from the Trump administration as the coronavirus threatens economic growth. The dollar weakened and Treasury yields fell after surging a day earlier.
The latest sell-off on the stock market comes with no sign of the stimulus package promised by President Donald Trump amid a European Central Bank warning of an economic shock similar to the financial crisis unless leaders act urgently. S&P 500 futures plunged 3%. The Stoxx Europe 600 zapped a 2.3% advance as travel and leisure shares dropped and Adidas AG slumped on a virus-related profit warning.
Most Asian benchmarks fell, while the yen rallied. Crude oil’s rebound from its biggest crash in a generation faltered after Saudi Arabia said it would boost production. The pound fluctuated and gilts declined after the BOE reduced its main interest rate by 50 basis points.
Stocks have whipsawed this week, with the biggest rout since the financial crisis followed by the best rally in 15 months. Losses resumed Wednesday even after the ECB indicated it may act as soon as this week, the Bank of England cut rates and German Chancellor Angela Merkel pledged to do “whatever is necessary” to bolster the economy.
With the US planning looking to be lagging behind, investors are growing increasingly concerned that whatever does come will not have the ability to stave off a major blow to the world’s largest economy. Goldman Sachs predicted the record-long bull market will not persist past midyear.
“Despite the hopes for fiscal stimulus everywhere, we see significant downside risks,” said Guillaume Tresca, a strategist at Credit Agricole SA in Paris. “As long as uncertainties remain on the number of cases, and central banks’ actions and fiscal stimulus plans are not lifted, we see few reasons for a protracted and long-term rebound.”
Meanwhile, Joe Biden cemented his position as front-runner for the US Democratic presidential nomination with primary victories Tuesday, further easing concerns among those opposing Bernie Sanders’s progressive platform.
These are the main moves in markets: