5.6 Trillion Dollars Melted Down in Stock Exchanges

$ 5.6 Trillion Melted Down On The Exchanges

Concerns that the coronavirus would slow global demand have sent stock markets melting down by $ 5.6 trillion. The US Central Bank has signaled an interest rate cut. Concerns that coronavirus, which started in China, is becoming an epidemic on a global scale and that the world economy will, therefore, go into recession have almost destroyed the markets last week. As investors exited riskier assets, stock markets recorded their toughest weekly losses since the financial crisis in 2008. 12% DROP IN 2 WEEKS The MSCI index, the index that shows the overall situation on the world's stock markets, has lost 12 percent in the last two weeks. The total loss in the market value of companies on the exchanges amounted to $ 5.6 trillion. Concerns that coronavirus could become a global epidemic and slow demand have pushed oil prices to a 4-year low. The price of a barrel of brent-type oil, which was $ 59 on February 20, fell to $ 49.67 on February 28. Oil suffered its biggest weekly loss in the past 4 years, with 14.2 percent. The Chinese purchasing managers ' index declined from 50 to 35. Analysts pointed out that China's economy is shrinking for the first time in 30 years. The price of gold fell close to 4 percent to $ 585 in value on the last trading day of the week, with a record sale of funds falling short of collateral. The VIX, which shows an appetite for Risk-taking and is known as the investors ' fear index, has climbed to a 2-year peak. Investors ' expectations that the US Central Bank will begin cutting interest rates starting this month have strengthened as the epidemic poses a threat to the global economy. Investors expect three interest rate cuts by mid-year, the first of which is in March. The interest rate cut was given a 9 percent chance a week ago. WE'RE READY MESSAGE FROM POWELL Fed Chairman Jerome Powell tried to lower the pressure by issuing a written statement on the earthquake in the markets. Powell said the coronavirus posed a risk to U.S. growth, saying they were prepared to cut interest rates if necessary to support the economy. $ 1.1 TRILLION LOST While Hubei, the region where the virus originated, stands out as the supply base of global giants, the report states that 51 thousand companies worldwide have one or more primary suppliers in this region. In total, it is emphasized that at least 5 million companies have one or two suppliers. The coronavirus could lead to a $ 1.1 trillion loss in the global economy if it turns into a pandemic, Oxford Economics reports. The report stressed that the outbreak's spread to areas outside Asia would be a 1.3 percent blow to global growth this year.