Coronavirus and oil feud send global shares plunging to worst levels since financial crisis

Trading in the US was halted for 15 minutes after shares plunged to levels last seen during the 2008 financial crisis • Italy lockdown sends cost of debt soaring

Global shares have plunged leaving markets in a situation that compares to the 2008 financial crisis
Global shares have plunged leaving markets in a situation that compares to the 2008 financial crisis

A steep decline in the value of US shares briefly halted trading on Monday as global markets reeled from the impact of plunging oil prices and the coronavirus.

The 15-minute suspension of selling and buying was triggered automatically as a result of a new mechanism introduced in 2013. This was the first time it was used.

When trading resumed the three major US stock indexes were down more than 6%.

The move came on the back of steep declines in global share prices as markets faced the worst day since the 2008 financial crisis, earning the label ‘Black Monday’.

Markets have been reeling from fears of the impact of the coronavirus but in what analysts have described as the perfect storm, the situation was made worse by an oil row between Russia and Saudi Arabia. The row saw oil prices plunge by 20%.

Russia and Saudi Arabia failed to agree cuts in petroleum production to maintain the price of oil stable in the wake of weaker demand as a result of the coronavirus.

Meanwhile, Italy woke up to its first day of a major lockdown across its northern territory as the government resorts to drastic action to curb the spread of Covid-19.

The decision has severely curbed travel and trade across the country’s rich territories leading to the postponement of major events and personal functions such as weddings, funerals and parties. Schools, universities and museums are shut and sports events are being played behind closed doors.

Italy has experienced the worst outbreak in Europe of the coronavirus with 7,375 registered cases and 366 deaths.

The situation saw the cost of Italian 10-year government bonds rise by more than 1.3%. The spread with equivalent German debt increased beyond 220 basis points.

In Malta, the first impacts of the coronavirus started being felt among tourism operators where conferences and major events have been postponed. The situation is expected to worsen as countries introduce travel bans or curb flights.

The Malta Chamber for Small and Medium Enterprises called on government to support businesses.

“At this stage, the impact of the coronavirus varies by sector. With changing consumption patterns, some are losing, and others are gaining. There are however some sectors that have already suffered significant losses due their absolute dependence on tourism and incoming events,” the Chamber said, urging the government to step in by making use of financial instruments that help ensure liquidity and provide working capital.


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