Global stocks tumble as Covid-19 points to prolonged slowdown

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Central banks are expected to follow the US Fed’s lead with rate cuts, with some analysts even expecting the Fed to cut rates again, and soon

London — Global stock markets tumbled on Friday as disruptions to business from the spreading coronavirus epidemic worsened, stoking fears of a prolonged economic slowdown.

After marking their worst weekly performance since the 2008 financial crisis, global stocks as measured by the index are up 1.7% this week, as sentiment recovered on the back of stimulus from policymakers to combat the economic fallout of the virus. Yields on US treasuries fell to a record low and treasury futures jumped as investors increased bets that the Fed will follow this week’s surprise rate cut with further easing. The yield on benchmark 10-year treasury notes fell to a record low of 0.7650% on Friday.

Rapidly falling yields hammered the dollar, which fell to a six-month low against the yen and close to a two-year trough against the Swiss franc. Germany’s benchmark 10-year bund yield fell to a six-month low, within striking distance of last year’s record lows. Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares excluding Japan fell 2.1%, while Japan’s Nikkei stock index sank 2.94%. Australian shares were down 2.44%. Shares in China fell 1.22%, while stocks in Hong Kong, another city hard hit by the virus, fell 2.12%.

 

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