Dow Plunges 10% With Stimulus Details Uncertain: Markets Wrap

(Bloomberg) — Financial markets spasmed, sending U.S. stocks down to December 2018 levels and Bloomberg’s to a record, as the economic fallout from the pandemic outpaced the massive response from governments and central banks.

The S&P 500 fell more than 7%, triggering a 15-minute pause, with stocks adding to losses when trading resumed. The next halt would occur at a 13% decline. The wiped out all the gains logged since Donald Trump’s inauguration, dropping as much as 10%, with investors craving more government spending to offset the impact from the virus.

Bonds tumbled around the world a day after Treasuries notched biggest yield jump since 1982, while municipal bonds extended the deepest rout since 1987 as markets braced for the potential flood of spending. Oil dropped to an 18-year low. The dollar strengthened a seventh straight day, while the pound hit its lowest level against the greenback since 1985.

Trump offered few details at a press briefing on the details his Treasury secretary is discussing with Congress. The Federal Reserve dusted off crisis-era programs to stabilize financial markets.

Governments have pledged or are considering massive fiscal support to offset the economic shock from the pandemic, with the Trump administration moving toward a big package, but the virus continues to spread at a pace that is forcing massive shutdowns across the globe.

“The missing fundamental ingredient for a sustainable recovery in risk appetite is some evidence that the growth of global Covid-19 infection rates is peaking,” said Paul O’Connor, head of multi-asset at Janus Henderson Investors. “Clearly, we are not there yet.”

The planned U.S. stimulus could amount to $1.2 trillion, aiming to stave off the worst impact of a crisis that already looks set to plunge many of the world’s economies into recession. Meantime, the Federal Reserve reintroduced additional crisis-era tools to stabilize financial markets. Those responses came after stresses appeared in the short-term funding markets.

“I don’t think we’re out of the woods yet in terms of liquidity,” Mark Konyn, chief investment officer at AIA Group in Hong Kong, told Bloomberg TV. “It’s a question of when the fiscal measures will have the most efficacy.”

In Germany, Angela Merkel said the government will not rule out joint European Union debt issuance to help contain the impact.

Elsewhere, Bloomberg’s industrial-metals index dropped for a third day, with , nickel and aluminum among the biggest losers. Gold resumed losses as traders sold the metal to cover margin calls in other markets.

These are the main moves in markets:

©2020 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.