Dow Jones plunges 7.8 per cent, world stock markets in turmoil on coronavirus fears and oil price war
The Dow Jones Industrial Average dropped more than 2,000 points on Monday trading, in single worst day since 2008 financial crisis
Stock markets around the world are declining dramatically due to coronavirus fears and falling oil prices.US stocks dropped dramatically on Monday, with the Dow Jones Industrial Average closing down 2,013 points, or 7.8 per cent. This is the biggest single-day point drop ever recorded for the Dow, an index which includes the stock prices of 30 of the largest companies listed in US stock exchanges.
Stocks are down because of coronavirus fears and crashing oil prices, as Saudi Arabia decided to cut oil prices by about 10 per cent in an escalating price war against Russia.
The Standard & Poor’s 500-stock index also dropped 7.62 per cent. This larger index includes 500 large companies in the US and is a better indication of the market as a whole. The Nasdaq index, which is composed of many information technology companies, fell 7.3 per cent on Monday.
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The drop on Monday was the fifth time that the Dow had fallen by more than 1,000 points during the presidency of Donald Trump, and was by far the biggest point loss.
Large declines were seen across the board, while US government bonds rallied as investors sought safer assets. US bonds are interest paying bills that are guaranteed by the government and typically offer a lower percentage of gains because of their relative safety.
All sectors in the S&P 500 dropped, with energy falling the most, by 20 per cent.
Saudi Arabia decided over the weekend to cut oil prices by 10 per cent, escalating its fight against Russia in an oil price war, with potential implication for Venezuela and Iran as well as American oil companies.
Oil prices fell, with the oil benchmark price tanking by about US$11 a barrel, or 25 per cent, late Sunday in the biggest decline since the Gulf War in 1991.
New York stock markets joined the global jitters after markets in Asia closed significantly down earlier on Monday. Japan’s Nikkei 225 index closed down 5.1 per cent in its biggest daily drop since 2016. The benchmark stock index in Shanghai fell more than 3 per cent. The Hang Seng Index in Hong Kong dropped more than 4 per cent on Monday.
Markets have grown increasingly anxious in the past week because of rising worries about the continuing spread and reach of the novel coronavirus. The flu-like illness, known as Covid-19, originated in China in December and has spread worldwide in the past months to more than 80 countries.
While the number of new cases has been contained in China after the government took drastic measures to lock down hundreds of millions of people in the epicentre of Hubei province in January, community outbreaks are sprouting around the world in Italy, South Korea, Japan and the US. Overall, more than 110,000 cases have been confirmed globally.