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article imageCoronavirus: For how long will financial instability last? Special

By Tim Sandle     Mar 15, 2020 in Business
The exponential rise of the novel coronavirus has impacted heavily on global financial markets. How far will share prices fall and for how long can we expect financial turmoil? Digital Journal has spoken with two analysts in relation to these questions.
The rapid geographical expansion of the betacoronavirus SARS-CoV-2 has significantly disrupted global economic activity. One of the main impacts has been a decline in investor confidence, leading to a drop in share prices, and global stock seeming to free-fall. This is despite many governments attempting to balance the effects with different policy initiatives.
As the rout in financial markets deepens amid ongoing coronavirus fears and investors continue to show a lack of faith in U.S. policy responses, many are questioning just how far the economy can plummet. In order to seek some answers, Digital Journal caught up with Investing.com analysts Jesse Cohen and Barani Krishnan, to try to make sense of the stock market volatility.
To begin with, Jesse Cohen, US markets analyst at Investing.com questions the effectivity of any interest rate cut: “Despite hopes for the Fed to bail out the market and save it from further losses, there's very little another rate cut can do to combat the spread of the coronavirus."
In terms of what is to come, the short-term outlook is bleak, as Cohen states: "The U.S. economy will suffer a near-term shock as supply chains break down and consumers grapple with the fast-spreading outbreak."
Furthermore, the analyst predicts: "We'll continue to experience heightened volatility and further downside as long as virus fears remain the dominant theme in financial markets. Airlines, cruise operators, casinos and other travel-sensitive stocks remain most at risk-despite already falling sharply in recent weeks."
And the issue could well stretch on for several months, according to Cohen: "As long as the virus continues to cause countries and governments to take drastic action, this problem isn't going to go away any time soon.”
Also commenting is Barani Krishnan, commodities analyst at Investing.com, who looks at the more immediate impact on the travel sector. This comes following Donald Trump's expanding of the the existing U.S. travel ban, in relation to mainland Europe, to cover the U.K. and Ireland.
Looking at this, Krishnan says: "The US travel ban on Europe is an unprecedented act that will have untold ramifications not only for human-to-human interaction and movement of goods between both sides of the Atlantic, but will also have dire consequences for virtually every market, as we're already witnessing. For oil prices, particularly, expect another 10 percent loss or more before the week closes."
From both analysts, the impact of the coronavirus looks like leading to further financial market turmoil for many weeks to come.
More about Financial, Share price, Stock market, coronavirus, Covid19
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