Markets continue to experience steep declines and volatility, despite a series of measures taken by central banks. On Sunday evening the Fed sought to stabilize the U.S. economy by slashing its benchmark interest rate to near zero—the second emergency rate cut this month. The announcement sent stock futures and global stocks sliding, with many investors not convinced that central bank action could counter the coronavirus’s effects.
By Monday’s close, the Dow had lost nearly 3,000 points, while the S&P and Nasdaq shed roughly 12%. Meanwhile, the TSX tumbled to a four-year low, and the loonie weakened more than 1% as Brent crude fell to below $30 a barrel. The steep fall in stocks globally sent investors scrambling toward U.S. government bonds, driving down the yield on 10-year U.S. Treasurys to 0.722%, from 0.946% at Friday’s close.
Markets bounced back a bit on Tuesday after the Fed said it would buy short-term corporate debt directly from companies to help relieve credit markets. U.S. Treasury Secretary Steven Mnuchin also proposed a $1-trillion stimulus package that would include roughly $250 billion in direct payments to Americans. By Tuesday’s close, the Dow regained more than 1,000 points, while the TSX rose 325 points. The yield on the 10-year U.S. Treasury note climbed to 0.994%, from Monday.
On Wednesday the Canadian government announced an $82-billion rescue package for businesses and households.
Despite the massive stimulus proposals from both the U.S. and Canadian governments, N.A. markets once again plunged as panicked selling took hold.
Stocks, bonds and commodities fell Wednesday in a simultaneous sell-off as investors scrambled to raise cash. Trading was halted intraday Wednesday for the fourth time this month after the S&P 500 lost more than 7%, triggering a circuit breaker (TSX trading was also halted).
Investors even abandoned government bonds and gold, normally considered safe-haven assets, which rarely happens
when stocks are also falling. The yield on 10-year Treasurys climbed to 1.26% as bond prices tumbled. Gold fell 3%, and silver dropped nearly 6%. However, the greenback was strong, highlighting the demand for safe cash.
Meanwhile the loonie has been hard hit, at one point plummeting to nearly US68 cents, its lowest level since 2003. By Wednesday’s close, the Dow had fallen more than 6%–slipping below 20,000 for the first time since early 2017–while the TSX lost 7.6%, as oil prices tumbled to the lowest level since 2002.
source https://richarddri.ca/market-sell-off-extreme-volatility-continue-as-economies-grind-to-a-halt/
Dri Financial Group 