A World Health Organisation (WHO) declaration of Covid-19 as a global pandemic has pushed the Dow Jones Index into a technical bear market, by falling an aggregate 20% from the recent peak.
All three US indices ended in another bloodbath day as virus fears ramped up. This is perhaps far from ending, as the virus has proven to be highly contagious while not enough social distancing controls have been put in place in many countries.
An epidemiologist from Harvard University predict that Covid-19 could eventually infect 40-70% of the world’s population and cause millions of deaths. If this is inevitable, policymakers should at least try their best to flatten the infection curve to avoid congestion in the healthcare system. Fiscal stimulus is necessary to stabilize the employment market when social distancing measures are already put in place.
Australia announced an emergency S$ 17.6 billion stimulus package to support small businesses and safeguard jobs. These measures, however, still failed to lift market confidence as the ASX 200 declined 2% alongside the AUD. A fragile market reaction suggest things might get worse before it gets better.
WTI Crude oil prices rebounded marginally after dropping as much as 5% yesterday. Near-term momentum leans towards the downside amid global demand concerns and the price war between Saudi and Russia.
In Singapore, the Straits Times Index fell 1.6% to 2,740 points – its lowest level since the 2016 oil crisis. As an open and small economy, Singapore is very susceptible to external shocks and thus vulnerable to a global selloff.