KUALA LUMPUR (Mar 14): The US stock markets suffered their worst crash since 1987 even after the Federal Reserve (Fed) said last Thursday that it will pump in trillions of dollars of temporary liquidity into the financial system.
The Dow Jones Industrial Average plunged 9.99% on Thursday, while the S&P 500 and the Nasdaq also dived 9.51% and 9.43% respectively.
And when the Asian stock markets opened the next day, on Friday the 13th — as if investors need a reminder on the omen of bad luck — major indices sank across the region, triggering trading halts from Seoul to Bangkok, Manila and Jakarta.
By Friday’s closing bell, the Shanghai Stock Exchange Composite Index had declined 1.23%, the Hang Seng Index had dropped 1.14%, the Straits Times Index was down by 1.67%, whereas the likes of Australia, India and Thailand have rebounded.
In Japan, the Nikkei-225 Stock Average slumped by 10% at its intraday low, before it closed 6% down.
Closer to home, the FBM KLCI fell 74.68 points or 5.26% to close at 1,344.75 points on Friday. A total of RM167.94 billion in market capitalisation has been wiped out over the week.
Interestingly, from peak to trough, the FBM KLCI had dropped 79% during the 97/98 Asian Financial Crisis (AFC), 45% during the 08/09 Global Financial Crisis, but between April 2018 and now, the benchmark index has dropped by only 25%. Does this indicate that there’s more downside to come? What should investors do?
Meanwhile, the oil and gas market is also undergoing a correction as a result of the price war between major producers Saudi Arabia and Russia. In fact, the drop in crude oil sent financial markets reeling last Monday.
What are the dynamics of the oil market and how long is this upheaval expected to last?
Read these and other stories in The Edge’s package of articles on the market rout, oil price war and economic impact of Covid-19 in the latest issue out now.