Saturday, August 13, 2022

ECONOMY | 12-03-2020 13:22

Merval suffers another rout fuelled by Covid-19 pandemic

As coronavirus pandemic prompts economic turmoil and a downturn in the markets, Dow index slumps 8.7% and Argentina's Merval index falls 9.52%.

The coronavirus pandemic and its fall-out hit the markets again early Thursday, prompting a Wall Street temporary shutdown in trading and sparking chaos on local markets.

Wall Street stocks were deep in the red early Thursday, prompting a 15-minute automatic suspension as the economic pain from Covid-19 widened.

After only 25 minutes of trading, the Dow Jones Industrial Average was at 21,505.07, down more than 2,000 points or 8.7 percent.

The broad-based S&P 500 tumbled 8.1 percent to 2,519.43, while the tech-rich Nasdaq Composite Index shed 7.9 percent to 7,323.31.

Trading was suspended after losses hit seven percent on the S&P 500, a benchmark that triggers circuit breakers halting transactions to manage crises.

Meanwhile, the Buenos Aires Stock Exchange's benchmark Merval index fell 9.52 percent to 28,426.96 points in line with the global slump.

Losses were generalised but state oil company YPF was one of the most affected (down 12.19 percent) along with the banks BBVA and Macro (both down 12 percent).

Argentina, which is beginning negotiations to restructure its public debt, recorded another rise in country risk rating, with the figure reaching 3,200 points amid the collapse of bonds traded on Wall Street.

The stock market registered a 13.75 percent slide on Monday, and although it rebounded 8.07 percent the next day, it collapsed again on Wednesday 4.30 percent in the midst of the global stock market tremor.

Argentina's total debt is about US$311 billion, of which US$121.9 billion is with private bondholders (35.9 percent of GDP), according to figures from the Ministry of Economy.

The government has recently announced the formation of the group of banks (Bank of America and HSBC) and the financial and information agents that will be intermediaries with the creditors. 

The European Central Bank on Thursday followed other major central banks with a flurry of measures to cushion the impact of the coronavirus, including increased bond purchases and cheap loans to banks, but surprised observers by leaving key interest rates unchanged.

Stock losses were widespread, but the impact on major airlines was especially acute after US President Donald Trump announced a 30-day travel ban on European travellers. 

Both Delta Air Lines and United Airlines tumbled more than 10 percent, adding to losses in a bruising period for the industry.



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