The Downfall continues
The historical rout in the share market amid coronavirus does not seem to stop at all. The global equity markets were sold off heavily in the first trading session of the new quarter as investors digested a series of grim predictions about the human and economic toll of the coronavirus pandemic. On Wednesday, the US stock markets closed more than 4 per cent lower. The debt markets also signaled a renewed concern about the creditworthiness of government and corporate local borrowers, despite a passage of $2tn economic stimulus that had encouraged investors in the final days of March.
Banks also facing the Consequences
The biggest banks in the UK sold off after saying they would scrap billions of pounds worth of dividends under pressure for the country’s top financial regulator. Shares in HSBC were down more than 9 per cent on Wednesday. Barclays and Lloyd banking group were also down by nearly 12 per cent. Furthermore, the US Banks also followed their European counterparts lower, with KBW Bank index, one of the most widely performance measures of the US banking sector, down 6.9 per cent. Citigroup shares were down 8.6 per cent. As low interest rates put pressure on net interest margins and investors worry about defaults on mortgages and loans, the sentiment on banks has soured.
Deteriorating Asian Markets
The significant Asian markets like Japan and South Korea also faced a considerable deterioration. Japan’s Nikkei 225 closed down by 4.5 per cent and South Korea’s Kospi was off by 3.9 per cent. China’s CSI 300 also slipped 0.3 percent. “The prospect for most economies’ manufacturing sectors as they head into the second quarter is for even more weakness, exacerbated, where lockdown measures are newly enacted or tightened,” said Robert Carnell, Asia-Pacific Head of research at ING.