Today’s sharp fall in US stonks means we’ve just witnessed the fastest correction – that is a 10 per cent fall from an all-time high – in the S&P500’s history, according to Torsten Sløk at Deutsche Bank.
Here’s the bank’s chart:
It comes on the back of news that California is monitoring 8,400 people for coronavirus. There were also signs from central bankers earlier today, including European Central Bank boss Christine Lagarde, that they are unlikely to launch fresh rounds of monetary stimulus to counter the economic and financial cost of coronavirus. We also note that the number of cases in France doubled today.
Has that convinced bank economists to rein in their expectations of action? Not exactly. Via Citi’s Ebrahim Rahbari earlier this evening (our emphasis):
If financial market turmoil persists or gets worse, a range of policy measures are likely. These will initially centre around providing liquidity to financial markets, including to limit fire sales, illiquidity and defaults. Central banks can deploy a variety of measures, including ad-hoc funding operations, new funding facilities, widening the number or type of counterparties eligible for central bank funding, adjusting the terms, or buying assets to act as the ‘market makers of last resort.’ Central banks generally still have plenty of room to provide liquidity. Rate cuts and government measures can often complement these measures. Supporting aggregate demand and activity is more difficult, but ultimately necessary to stabilize markets. It would require mostly fiscal measures, but a hit to growth would likely be inevitable even with a sizable policy response.
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February 28, 2020 at 04:45AM
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Snap AV: S&P slump fastest correction ever, says Deutsche - Financial Times
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