DUBAI: Coronavirus turbulence in financial markets continued on Monday despite the biggest ever intervention by the US Federal Reserve.
All eyes were on the opening on Wall Street after a Western weekend of bad virus news and a $2 trillion stimulus package for the American economy held up by Congressional wrangling.
But the Fed stepped into the role of market savior just before the opening bell with an unprecedented offer to prop up financial markets by buying US bonds in unlimited numbers, and other measures to support financial asset prices.
After a brief uptick following the Fed intervention, the main S&P 500 index fell back once more and closed about 3 percent down. Stock markets in Europe were also significantly lower.
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The selling pressure was in evidence in the Middle East too, where the biggest markets in Saudi Arabia and the UAE all fell. The Tadawul ended 2.78 per cent lower, with its biggest stock, Saudi Aramco, 1.21 per cent down at SR28.55 per share.
The gloomy mood in US markets reflected disappointment that a promised “bazooka” support package had not materialized, Tarek Fadlallah, Dubai based chief executive of Nomura Asset Management, told Arab News. “The Fed can keep the financial system liquid but that doesn’t address the fundamental issues of the real economy. Wall Street is all eyes on the stimulus package,” he said.
At a “virtual” meeting, G20 finance ministers and central bank governors agreed to develop an action plan in response to the coronavirus and monitor the pandemic’s economic impact, the Saudi Secretariat said.