On March 9th, 12th and 16th, within two weeks, US stock ushered in an unprecedented three meltdowns.
U.S. stocks collectively opened higher on Tuesday, supported by a series of stimulus policy expectations. However, within half an hour, investors saw the familiar "roller coaster" market again. The three major indexes dived green again. Among them, the Dow Jones Industrial Average fell below the 20,000-point mark for the first time in three years.
Subsequently, at noon on March 17, Eastern Time, the United States launched a stimulus package of up to one trillion US dollars, including US$500-550 billion that will be used to directly distribute cash to the people or reduce taxes.
Boosted by this news, the three major U.S. stock indexes fluctuated higher. As of the close, the Dow rose more than 1,000 points and the Nasdaq rose more than 6%.
European stock markets also experienced collective gains. As of the close, all three major stock indexes had risen by more than 2%.
Overall, market panic has eased slightly, with the VIX index closing down 8.2%.
FTSE China A50 Index futures closed up 2.02% in night trading.
The U.S. government is brewing a trillion-dollar stimulus plan
html On March 17, the three major U.S. stock indexes collectively opened higher, with the Dow Jones Industrial Average rising 1.72%, the Nasdaq Composite Index rising 2.42%, and the S&P 500 Index rising 1.90%. In terms of industry sectors, energy and consumer discretionary sectors were weak, while technology, utilities, and healthcare sectors were strong.Soon after the market opened, U.S. stocks plunged collectively, with the Dow Jones Industrial Average once falling below the 20,000-point mark.
Then good news came out.
The Federal Reserve provides liquidity and credit support to the market. The New York Fed announced that it will provide one trillion US dollars in funds to the market every day this week through overnight repurchase operations. , of which US$500 billion will be provided in the morning and afternoon trading hours. In order to ease the pressure on the financing market, the Federal Reserve announced the launch of the Commercial Paper Funding Facility (CPFF) to support the flow of credit to households and businesses in need. This facility is expected to improve the ability of businesses to maintain employment and investment during the epidemic.
The Federal Reserve used this mechanism during the 2008 financial crisis. In order to establish this mechanism, the Federal Reserve used special powers 13(3) of the Federal Reserve Charter this time, allowing the central bank to authorize its reserve banks to issue credit on the grounds of "abnormal and emergency situations." In 2010, Congress required the Fed to obtain approval from the Treasury Department before using this authority.
In addition, U.S. Treasury Secretary Mnuchin will announce specific details of a stimulus plan that will exceed $1 trillion later on Tuesday Eastern time, , which includes $500-550 billion for direct cash payments or tax cuts to people, $200-300 billion for small business assistance, and $50-100 billion for aviation and industry relief.
Mnuchin said at a midday press conference that the Trump administration hopes to "immediately" put emergency funds into Americans' pockets during the epidemic. Americans need cash now. When answering a question about the operation of the stock market, he said that everyone hopes that the financial market will remain open and the opening hours may be shortened if necessary. The government will do everything it can to ensure Americans have access to the money they have in banks, the stock market and 401k pensions.
Star stocks in the US stock market have mixed performance.
Technology stocks performed well, with Apple rising 4.4%, Microsoft rising 8.23%, Google rising 4.2%, and Amazon rising 7%.
Tesla once fell by more than 11%, Boeing once fell by nearly 20%, hitting a new low since 2016. As of the close, Tesla fell 3.34% and Boeing fell 4.39%. According to
Wind data, Boeing's stock price has fallen by 61.73% since the beginning of the year. The total market value at the beginning of the year was approximately 1.3152 billion yuan, which was not much different from the market value of Kweichow Moutai at that time. Its latest market value is only about 489.8 billion yuan, which is only equivalent to 37% of Moutai’s latest market value.
In this round of decline, even the world's top listed companies will not be immune. This plunge also caused Amazon and Google to fall out of the "trillion dollar club" of the US stock market. Currently, only Apple and Microsoft have a market value of more than 1 trillion US dollars.
However, the market value of Microsoft has also shrunk by 774.1 billion yuan, and the market value of Apple has shrunk by 1.474 billion yuan, which is equivalent to the market value of Kweichow Moutai.
Many countries urgently rescue the market prohibit short selling
17, many countries introduced rescue measures.
As the epicenter of the epidemic in Europe, Italian stocks have generally been discounted by 40%.
After issuing a short-selling ban last Friday, Italy issued a short-selling ban again after only one trading day.
html On the 17th, the Italian Securities and Exchange Commission (Consob) issued a short-selling ban, prohibiting short selling of 20 Italian Stock Exchange (MTA) stocks.17, France and Belgium also announced similar bans on short selling.
French Finance Minister Le Maire said that France will ban short selling in the next 24 hours. This is the first time France has taken measures to ban short selling since the outbreak.
In addition, French Finance Minister Le Maire also said that 45 billion euros will be used as crisis response measures.
On the same day, the Belgian financial regulator FSMA also announced a ban on short selling and similar transactions.
FSMA said that in order to prevent a "disorderly decline", the ban on short selling applies to trading throughout the 17th.
Affected by this news, major European stock indexes generally rebounded and opened higher. The British FTSE 100 index , German DAX index , French CAC40, and Belgian BFX all opened higher by more than 4%. However, with the panic selling pressure, the index fell rapidly again.
As of the close, the French CAC40 index fell by 2.84%, the British FTSE 100 index fell by 2.79%, and the German DAX index fell by 2.25%.
Expert: A shares will also be affected by external influences in the short term
html A shares fluctuated widely on March 17, showing a V-shaped trend. The Shanghai Composite Index closed down 0.34%, only down 10 points. A shares can still be called a "safe haven" for global assets.Regarding the recent market performance, Guosheng Securities said that since late February, despite the spread of the epidemic in overseas markets, there is no need to panic excessively in A-shares. In fact, when the market has turned pessimistic and wary of overseas risks, A-shares have remained resilient.
Guosheng Securities analysis said that from a fundamental perspective, there is a cyclical dislocation between domestic and overseas. At the same time, global monetary easing is accelerating, and the sharp decline in oil prices has weakened inflation concerns, and domestic relaxation space has been further opened. In terms of capital, although foreign capital has recently been withdrawn due to overseas fluctuations, judging from the marginal changes in incremental capital, the market focus has shifted back to the domestic market at this stage.
Founding Dean of the Institute of Chinese Economic Thought and Practice at Tsinghua University Li Daokui pointed out that China’s financial market has been in a period of adjustment since 2015. There was finally a certain rebound in 2019, but it was far from adequate. Therefore, when the epidemic hit, China's financial market was actually in the process of a spring that was ready to take off. The epidemic was equivalent to a "late spring cold". In the United States, it is "autumn" and the "season" is different.
Li Daokui said that in this sense, the A-share market will definitely be stimulated and affected by the US financial market in the short term, but this impact should be very short-term and very limited.
In addition, Yang Delong, chief economist of Qianhai Kaiyuan , said that the A-share market trend is resilient. At present, the valuation of A-shares has returned to its historical bottom, and there is not much room for decline. As the epidemic is gradually brought under control, the economy will soon return to normal growth in the second, third, and fourth quarters and will not remain in a sluggish state. This is also the main reason for the strong trend of the A-share market.
Source: Daily Economic News
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