Historic Wall Street Crash: The Dow Jones experiences the biggest daily loss since the financial crisis. In addition to the fear of the economic consequences of the coronavirus epidemic, the slump in oil prices has a major impact on US stock prices.
The spreading corona virus and a crash on the international oil markets have caused the US stock market to collapse. The Dow Jones index recorded the largest daily loss since the financial crisis in 2008. The Dow Jones Industrial lost more than 2,000 points, or 7.79 percent, to 23,851.02 points. In the past two weeks, the Dow had already lost almost eleven percent, particularly due to the impending consequences of the corona virus for the global economy.
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The market-wide S&P 500 lost 7.60 percent to 2746.56 points. The technology-heavy Nasdaq 100 was down 6.83 percent to 7,948.03 points. After panicky sales immediately after the start bell, the share trading was initially interrupted for 15 minutes. The price fluctuations were so great in the first minutes of trading that the exchange temporarily stopped trading.
In addition to the consequences of the corona virus for the global economy, a drop in oil prices was an additional burden. After failed negotiations by leading oil countries to cut production volumes, the oil market experienced the steepest price slump in almost 30 years. The negotiating partners of the Opec oil cartel and allied countries could not agree on a new agreement. Saudi Arabia now wants to increase oil production. “A price war among producers is now facing weak oil demand,” wrote asset manager DWS in a market comment.
Historical price drops in the energy sector
Subsequent falls in prices of historic proportions then had to accept shares in the US energy sector. For papers from industry giants such as Occidental Petroleum, Schlumberger and Halliburton, prices have been down for many years between 27.4 and more than 50 percent. ExxonMobil and Chevron stocks in the leading Dow index lost 12.2 and 15.4 percent, respectively. ConocoPhillips dropped by almost 25 percent.
Commodities expert Carsten Fritsch from Commerzbank spoke of a “black Monday on the oil market”. Saudi Arabia has opened a new price war for market share with the announcement of higher production volumes and lower prices. The oil market is threatened by a massive oversupply in the second quarter, especially since demand due to the Covid 19 pandemic is likely to remain severely affected for some time to come.
Bank stocks also suffered above-average losses. Among the heavyweights in the Dow, JPMorgan slumped 13.7 percent and Goldman Sachs slumped 10.4 percent. On the one hand, stock marketers justified this with the upheavals in the financial markets that are affecting the US financial industry. On the other hand, analyst Saul Martinez from Bank UBS pointed out that US banks had given large loans to the oil industry – with the risks now rising sharply.
Investors rely on security
With regard to the Covid-19 virus, economic data from China testified to the economic consequences: In the country of the outbreak, where the novel corona virus has been paralyzing public life for weeks, exports plummeted in January and February compared to the same months of the previous year. The US government is rumored to be working on an aid package for the US economy to mitigate the economic impact.
Investors are banking on security: In the US bond market, trend-setting ten-year government bonds rose by a whole point and returned 0.57 percent. This means that the yield on bonds, which are considered the world’s most important debt, has almost halved since mid-February.
The euro surrendered part of its gains during the course of the US trade and cost $ 1.1450 at the close on Wall Street. Previously, the common currency had risen to almost $ 1.15, its highest level since the beginning of last year. The European Central Bank set the reference rate this afternoon at $ 1.14 (Friday: 1.13). The dollar had thus cost 0.87 (0.88) euros.
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