Question

The Coronavirus (COVID 19) pandemic has so far been of global significance in the financial markets.
1. Give an account of the impact of the coronavirus on the financial markets with illustrations from five (5) global financial centres
2. What are the potential effects of the market developments in question one (1) on the world economy?
3. Describe the fiscal stimulus packages and monetary policy interventions initiated by policymakers in the five (5) countries in question one (1) above to contain the devastating effects of the pandemic.

Answer 1

1) Coronavirus has had an devastating effects on the financial markets of the global economy.Due to coronavirus the world faced the greatest of financial and human losses. Hereby I am quoting the effects of the coronavirus on the financial markets of Asia, USA, China and Hong Kong.

· U.S. stocks lost nearly 12% and $3.5 trillion was erased for U.S.-listed stocks. The Dow Jones Industrial Average tumbled 12% for the week

· MSCI’s world index, which tracks almost 50 countries, was down over 1% once Europe opened and almost 10% for the week – the worst since October 2008

· European shares ended the week down roughly 1.5 trillion US dollars in their worst weekly performance since the 2008 financial crisis. The pan-regional STOXX 600 index fell 3.5% on Friday

· Asian stocks incurred significant losses:

· China’s Shenzhen stocks led losses among major markets regionally as they closed sharply lower. The Shenzhen component was 4.8% lower.

· The Shanghai composite was down 3.71%.

· Hong Kong’s Hang Seng index dropped 2.42%.

· The Nikkei 225 dropped 3.67%

2) The potential effects is neighter hard to understand nor hard to see.

· The USA Federal Reserve slashed the interest rate by 50 basis points.

· The bank of Japan is asked to monitor the European markets very closely.

· Gulf of Bahrain cuts its interest rate by 0.5%.

3) The fiscal stimulus packages involved in all the countries are-

· The Congress in USA passes $484 billion economic relief package.

· The Japanese market was nearing economic crisis even before Corona. The government of Japan passes $240 billion virus package, including cash Handouts.

· China on other hand unveiled $586 billion package to be spent.

· European governments have announced economic rescue packages worth a combined €1.7tn (£1.6tn) to combat the effects of the coronavirus

· India, a gaint in Asia is targeting small business in times of economic turmoil.