More mayhem in markets as virus takes its toll

Market panic remained on Monday despite unprecedented US efforts. (AFP)
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Updated 24 March 2020

More mayhem in markets as virus takes its toll

  • Intervention by US Federal Reserve fails to halt slide as politicians wrangle over $2 trillion stimulus package

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.


EU pledges to stay green in virus recovery

Updated 29 May 2020

EU pledges to stay green in virus recovery

  • To help economies from the 27-nation bloc bounce back as quick as possible

BRUSSELS: The European Commission pledged on Thursday to stay away from fossil-fueled projects in its coronavirus recovery strategy, and to stick to its target of making Europe the first climate neutral continent by the middle of the century, but environmental groups said they were unimpressed.

To weather the deep recession triggered by the pandemic, Commission President Ursula von der Leyen has proposed a €1.85 trillion ($2 trillion) package consisting of a revised long-term budget and a recovery fund, with 25 percent of the funding set aside for climate action.

To help economies from the 27-nation bloc bounce back as quick as possible, the EU’s executive arm wants to increase a €7.5-billion ($8.25 billion) fund presented earlier this year that was part of an investment plan aiming at making the continent more environmentally friendly.

Under the commission’s new plan, which requires the approval of member states, the mechanism will be expanded to €40 billion ($44 billion) and is expected to generate another €150 billion in public and private investment. The money is designed to help coal-dependent countries weather the costs of moving away from fossil fuels.

Environmental group WWF acknowledged the commission’s efforts but expressed fears the money could go to “harmful activities such as fossil fuels or building new airports and motorways.”

“It can’t be used to move from coal to coal,” Frans Timmermans, the commission executive vice president in charge the European Green Deal, responded on Thursday. “It is unthinkable that support will be given to go from coal to coal. That is how we are going to approach the issue. That’s the only way you can ensure you actually do not harm.”

Timmermans conceded, however, that projects involving fossil fuels could sometimes be necessary, especially the use of natural gas to help move away from coal.

The commission also wants to dedicate an extra €15 billion ($16.5 billion) to an agricultural fund supporting rural areas in their transition toward a greener model.

Von der Leyen, who took office last year, has made the fight against climate change the priority of her term. Timmermans insisted that her goal to make Europe the world’s first carbon-neutral continent by 2050 remained unchanged, confirming that upgraded targets for the 2030 horizon would be presented by September.

Reacting to the executive arm’s recovery plans, Greenpeace lashed out at a project it described as “contradictory at best and damaging at worst,” accusing the commission of sticking to a growth-driven mentality detrimental to the environment.

“The plan includes several eye-catching green `options,’ including home renovation schemes, taxes on single-use plastic waste and the revenues of digital giants like Google and Facebook. But it does not solve the problem of existing support for gas, oil, coal, and industrial farming — some of the main drivers of a mounting climate and environmental emergency,” Greenpeace said.

“The plan also fails to set strict social or green conditions on access to funding for polluters like airlines or carmakers.”

Timmermans said the EU would keep investing in the development of emission-free public transportation, and promoting clean private transport through the EU budget.