A volunteer, that directs visitors at a coronavirus testing center, gestures at the Kuwait International Fairgrounds in Mishref, Kuwait, March 18, 2020.
Policymakers in the United States, Europe and Asia have slashed interest rates and opened liquidity taps to stabilize economies left almost comatose because of the coronavirus pandemic, with quarantined consumers, broken supply chains, paralyzed transportation and depleted shops.
While finance ministers and central bankers adopted similar strategies, markets and nations where borders were being closed and cities placed in virtual lockdown were further alarmed by bickering between global powers — the United States and China.
There were almost 219,000 cases of coronavirus reported globally, including over 8,900 deaths linked to the virus. Over 20,000 of those cases were reported in the past 24 hours, a new daily record.
China, where the epidemic first started in December, provided a glimmer of hope, as it reported zero new local transmissions of virus, though imported cases surged, accounting for all 34 new cases on Wednesday.
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While the economic crisis spawned by the pandemic caused carnage in stock markets, almost every currency, except the euro and safe-haven yen, collapsed against the dollar.
The European Central Bank launched new bond purchases worth 750 billion euros ($817 billion) at an emergency meeting late on Wednesday, in a bid to prevent a deep recession that threatened to outdo the 2008-09 global financial crisis.
“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said, amid concerns that the strains from burgeoning crisis could eventually tear apart the eurozone as a single currency bloc.
In the United States, the Federal Reserve rolled out its third emergency credit program in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning if investors made rapid withdrawals.
On Sunday, the Fed slashed interest rates to near zero and pledged hundreds of billions of dollars in asset purchases, while President Donald Trump’s administration drew up a $1 trillion stimulus and rescue proposal.
US infections were closing in on 8,000, with the death toll climbing to at least 151. Millions of Americans were staying at home.
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The desperate state of industry was writ large in Detroit, where the big three automakers — Ford, General Motors and Fiat Chrysler — confirmed they would be shutting US plants, as well as factories in Canada and Mexico.
The United Kingdom was bracing for the virtual shut down of London as underground train stations across the capital closed and Prime Minister Boris Johnson mulled tougher measures to slow the contagion, with schools set to shut on Friday.
The British pound plunged to its lowest level against the dollar since 1985, as Bank of England Governor Andrew Bailey said he would not rule anything out when asked about printing money to give to individuals.
Australia made an historic foray into quantitative easing after an out-of-schedule meeting on Thursday and cut interest rates for the second time in a month.
“Really nothing is off the table,” Australia central bank Governor Philip Lowe said. “We are in extraordinary times and we’re prepared to do whatever is necessary.”
South Korea warned of a global credit crunch and said it was setting up crisis funds to stabilize markets.
“We’re in this phase where investors are just looking to liquidate,” said Prashant Newnaha, senior interest rate strategist at TD Securities in Singapore.
Central banks in emerging countries from Brazil to India have stepped in this week to buy government bonds to prevent a jump in borrowing costs that would put more pressure on their economies.
Despite those moves, which together with other liquidity injections and stimulus announced in recent weeks reached levels unseen since World War II, nearly every stock market in Asia was in the red, with Seoul, Jakarta and Manila hitting daily loss limits that trigger the suspension of trade.
The Philippines bourse was down 24% at one point. The Philippine central bank cut its policy rate be 50 basis points and said it was ready to deploy other policy tools as needed. Indonesia and Taiwan also cut rates.
War of words
J.P. Morgan economists forecast the US economy to shrink 14% in the next quarter, and the Chinese economy to drop more than 40% in the current one, one of the most dire calls yet on the potential scale of the fallout.
But, it was not just the dire state of the economy that panicked investors. Tensions between the world’s two biggest superpowers reached some of their most elevated levels and other powers were locking heads over their reactions to the outbreak.
Trump ratcheted up his rhetoric against China over the coronavirus on Wednesday, saying Beijing should have acted faster to warn the world and dismissing criticism that his labeling it the “Chinese virus” was racist.
Trump’s language added to strains between the world’s top two economies as their war of words widened to include the global pandemic and media freedoms.
A European Union document seen by Reuters said Russian media have deployed a “significant disinformation campaign” against the West to worsen the coronavirus impact, generate panic and sow distrust.
Russia reported its first coronavirus death on Thursday.
In contrast, scientists and health experts in China believe the worst could be over, and its cities were slowly coming back to life, with more people going back to work, with the government saying it will provide financial support to exporters and the service industry.
Germany, Iran and Spain reported over 12,000 cases each, while 12 other countries confirmed between 1,000-10,000 cases each. The virus has reached 172 countries and territories.
Governments around the globe, from the United States and Britain to the emerging world have been criticized for acting too slowly to stop the spread.
In Brazil, where President Jair Bolsonaro initially labeled the virus “a fantasy”, more members of the country’s political elite fell ill. On Wednesday night, housebound protesters banged pots and pans, shouting “Bolsonaro out!” from their windows.
By Marius Zaharia/Reuters
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