The stock market has responded to the COVID-19 pandemic with worrying volatility, as traders have panic-sold out of fear. As a result of the recent turmoil, the market-wide circuit-breakers that attempt to prevent panic-trading, have been triggered four times alone in March. The market has reacted to recent unpredictability with large drops, triggering a market-wide circuit breaker four times in March. The safeguard pauses trading for 15 minutes in hopes the market will calm. The coronavirus has created such uncertainty around the world that two of the largest single-day drops in the Dow Jones Industrial Average have been from March of 2020.

The negative superlatives for American stocks are piling up. The S&P wiped out its gain in 2019 and is now down almost 30% from its all-time high. The Dow Jones Industrial Average lost almost 13%, falling 3,000 points to close at a two-year low. The Russell 2000 had its worst day on record, losing more than 14%. While the Fed cut rates toward zero and stepped up bond-buying, investors continued to clamour for a massive spending package to offset the pain from closures of schools, restaurants, cinemas and sporting events. Companies around the world have scaled back activity to accommodate government demands to limit social interaction.

S&P Financial Values – covid-19

Source: Yahoo Finance

The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook. An International Monetary Fund pledge to mobilize its $1 trillion lending capacity also had little impact in markets.

Source: EM equities is the MSCI EM equity index. Commodities are SPGSI Index.

The pan-European Stoxx 600 provisionally closed 5.1% lower, off lows hit earlier in the session. Travel and leisure stocks plummeted around 10% to lead losses as all sectors and major bourses ended the day in the red. Spain’s IBEX was around 8.3% in the red and Italy’s FTSE MIB was down over 6%. France’s CAC 40 provisionally ended 5.9% lower. Germany’s XETRA DAX closed 5.3% in the red as the U.K.’s FTSE 100 finished 4.7% lower.

Source: Bloomberg. Data as of February 28, 2020. Currency axis inverted to show appreciation

Airlines and travel companies continued to suffer on Monday, although by the end of the day had pared some losses. Tui shares ended down around 13%, EasyJet shed 19%, Air France KLM fell 10% and British Airways parent IAG tumbled 27% after hitting 52-week lows. In the meantime, global investors will seek the safety and liquidity of USD assets, gold and safe haven currencies (Swiss, Yen).

In addition, please read more about covid-19 financial and private equity impact on global markets.