The global equity markets have collapsed and with the US Dow Jones down 2,000 points in one day – this is a once every ten years event – shock and awe are taking over. Market participants are in panic as the US equity market fell on the back of the accelerated spread of coronavirus and the added shock of the Saudi government announcing that it was giving oil price discounts and pumping more for global markets to absorb. As a result, oil prices fell 30% and global equity markets imploded – and it this selloff is not over.
Many investors and traders who were caught off guard are still selling, some in obvious panic mode. The selloff was so fast the automatic stop breakers were triggered, preventing a complete meltdown on the US exchanges. These triggers are set to stop all trading for 15 minutes they of course they turn on, thus preventing panic and sometimes market attacks by program or machine/algo trading which can dump millions of shares in seconds, literally seconds.
Note that the coronavirus has too many unknowns, and the fear now is that both supply side and demand side pressures exist. Factories are shut down, supply and people stop shopping – demand which is highly unusual and of course severely damage economic activity.
Stocks: We are looking to cover short positions, and will eventually go long. later in the month or in early April.