The question now is whether an unprecedented intervention by central banks and other policy makers – with more potential roadside assistance – will be enough to stabilize the risky assets or whether they will take another stance.
Some investors believe that stocks have even more to lose due to the extremely uncertain outlook.
“Recent experience shows that it would be a mistake to be too satisfied with the fall of this stock market, which ultimately seems to reflect part of the growing weight of bad news in the global economy,” ING’s Robert Carnell said in a statement. customers Friday.
The sell-off is partly due to remarks by Federal Reserve President Jerome Powell that the US labor market remains in an incredibly weak position and that recovery will be largely determined by the course of the virus.
But Carnell notes that Powell simply said what everyone knows: that the world economy is in a bad position and there will be no quick recovery.
JJ Kinahan, chief market strategist at TD Ameritrade, told me that the optimism trade was forced to respond to real trade at some point, reducing corporate estimates.
“The reality is as you start looking at the numbers, a lot of these businesses aren’t going to open up quickly enough to buy,” he said.
In recent weeks, a massive expansion of the Federal Reserve’s balance sheet has given investors confidence to return to risky assets. This support has gone nowhere and Powell assured market observers that the central bank will help as much as needed.
More tax aid could also be on the way. U.S. Treasury Secretary Steven Mnuchin said Thursday that the White House is considering another round of stimulus checks, according to the Wall Street Journal.
But with VIX, a measure of S&P 500 volatility, which peaked above 40 on Thursday, the highest level since April, the direction of travel for next week’s reserves is dark.
“Some investor fingers will be burned. But others will see it as a buying opportunity,” Carnell said. “After [Thursday’s] adjustment, there is no idea how the markets will go. “
One or two punches from the coronavirus and Brexit threaten the United Kingdom
Britain is already heading for the worst drop caused by a corona in any major economy. Now fears are growing that businesses could be hit by a second blow this year – the failure of trade talks with the European Union, says my colleague at CNN Business, Hanna Ziady.
The last one: The economic picture of the country is already terrible. UK production fell 20.4% in April from a month earlier, the government said on Friday. The country’s economy was about 25% smaller than in February.
However, the situation could worsen further as the country approaches the deadline to conclude a trade agreement with the European Union, its largest single export market, by the end of the year.
The Organization for Economic Co-operation and Development (OECD) said this week it expects the UK economy to shrink by 11.5% this year, even if a key free trade agreement with the European Union is reached and a second wave of infections is avoided.
This is the worst projected contraction between the big economies. And if the infections rise again and stricter social distance measures are reintroduced, GDP could collapse by 14%, the OECD said.
On Thursday, the head of the Confederation of British Industry, which represents 190,000 British companies, warned that businesses could not withstand another shock, with many already struggling to survive.
“The resilience of British businesses is absolutely on the floor,” CBI CEO Carolyn Fairbairn told the BBC. “Every penny of cash that has been stored, all the stocks they have prepared have been depleted.”
The corporate America’s calculation in the race is gaining momentum
Global protests against police violence and systemic racism are pushing companies to make changes to political and corporate leadership, with announcements from Silicon Valley in the retail sector and the start-up universe accumulating throughout the week.
Some changes: Sephora said it would dedicate 15% of its storage space to black brands, while Walmart said it would end the practice of locking up black hair care products sold in its stores. Walgreens and CVS Health are following suit, according to the AP.
Audrey Gelman, meanwhile, resigned on Thursday as CEO of The Wing, a collaborating startup for women. Members and workers have spoken out in the past about racist incidents and abuse. Leading brass on the Refinery29 website and media giant Condé Nast also left this week after being criticized for corporate culture.
And Niki said on Thursday that she would hold a corporate celebration on June 19 (June 19) – a celebration of the end of slavery in the United States – on Twitter, Square and Vox Media.
But so far, corporate America has avoided talking about weakening the police.
My colleague at CNN Business, Chauncey Alcorn, has addressed several Fortune 500 companies that have made public statements in support of the Black Lives Matter movement in recent days, including Amazon, Facebook, Twitter, Bank of America, Chase Bank, Citigroup. and Google. No one said they were supporting police stations that were useless.
Research on the consumer sentiment of the University of Michigan for June reaches 10 p.m. ET.
Coming next week: A wealth of financial data for May, including retail and home sales, is starting in the United States.