Coronavirus Crisis Deepens, Panic to Intensify Recession
Stocks slid down on Thursday, alarming both investors and the financial markets worldwide. Amid the coronavirus cases, financial experts reminded that selling while in panic mode could make matters worse. Nevertheless, they clarified that the recession isn’t far from happening.
According to Gerald Townsend of Townsend Asset Management, this kind of situation in the financial sector is not uncommon; it’s basically a rough patch that could be straightened out over time.
The Dow Jones Industrial Average decreased by 2,250 points at one point but started going back up again after the Federal Reserve pledged to address the disruptions in the bond market. Meanwhile, the European markets lost 12% even though the European Central Bank promised to provide more help for the economy and buy more bonds.
Such losses happened as coronavirus cases surge and businesses shut down across the globe. President Trump has already suspended flights from Europe to the US and people are worried that the US government and other authorities worldwide may not address the economic damage from the pandemic at once.
Townsend said that coronavirus has already impacted the economy and it will continue to do so. He also advised against selling in panic mode; even though the market has decreased by 25%, it’s the worst thing investors could do right now.
The economic damage seems to be extending worldwide as United Airlines suffered a 50% plus loss, whereas Royal Caribbean Cruises and Norwegian Cruise Line lost about a quarter of their value. In Asia, stock trading in the Philippines and Thailand was temporarily suspended and South Korea’s market had a 3.9% loss as well.
More disruptions in the financial sector are expected as more aggressive measures are taken by various countries to contain the virus. These include banning mass gatherings, closing schools, and locking down highly infected areas.