Looking at today’s market action, that’s no hyperbole.
With the exception of US Treasuries — where yields again fell to 0.7% as investors sought safety — it was a virtual fire sale across global markets.
Everything must go! Best offers taken!
Stocks. Oil. Cryptos. Gold. The Aussie dollar.
Few were spared.
US markets suffered their worst fall since 1987’s Black Monday. By the closing bell the Dow Jones was down 10.0%.
The panic selling again tripped the circuit breakers on Wall Street. Trading was suspended for 15 minutes. That’s the second day this week. But it did little to halt investors’ rush for the exits.
The Aussie market doesn’t use the same system. The ASX explains in a tweet, ‘We observed in other markets that circuit breakers can exacerbate volatility.’
Instead the ASX uses order thresholds enabling it to suspend trade in specific stocks for two minutes.
We’ll see how that works out. At time of writing the ASX 200 is down 1.6% in intraday trading.
The picture is grimmer in Europe.
A recession is looking ever more likely
The Euro Stoxx endured its biggest single day loss ever, closing down 12.4%.
More concerningly (there’s more?) this is happening at time of record low interest rates, with yet more rate cuts on the horizon.
And central banks the world over are bringing QE back in play.
The European Central Bank (ECB) announced it will buy €120 billion (AU$212.4 billion) more in bonds. The bank also will provide low cost loans to banks to ensure solvency.
But the ECB’s announcement pales in comparison to the big guns the US Fed rolled out.
The Fed, citing ‘highly unusual disruptions’ said it will inject US$1.5 trillion (AU$2.3 trillion) into the financial system.
That’s right. $2.3 trillion…and investors’ stampede for the exits continued unabated. And the exodus could well have a ways to go yet.
Even the mainstream is catching on. IG Markets now forecasts a potential 50% drop in the ASX 200, from its recent record highs, by the end of 2020.
That’s not going to do much for the Australia’s growth outlook. In fact a recession is looking ever more likely.
In his special free report, ‘Why Australia’s Miracle Economy is a Farce’, The Rum Rebellion editor Vern Gowdie explains why.