NEW YORK (Dispatches) - Stock markets, oil and gold prices went into freefall Monday as interest rate cuts and fresh stimulus measures by central banks failed to lift confidence, with analysts warning that the Federal Reserve may have reached the limits of its power to fend off recession as the coronavirus spreads.
There were no glimmers of optimism: Paris tumbled 9% shortly after the open, London sank 7% and Frankfurt gave up 7.5%. In Asian trading, Sydney’s benchmark plunged 9.7%, Hong Kong’s Hang Seng lost 3.4% and India shed 5.9%.
Tokyo closed 2.5% lower after Japan’s central bank expanded asset purchases to inject money into the economy and promised no-interest loans to help companies cope with the crisis. Chinese shares fell after Beijing reported consumer spending and factory output were even worse than expected.
On Wall Street, futures for the benchmark S&P 500 index and Dow Jones Industrial Average were off nearly 5% following Sunday’s emergency rate cut by the Federal Reserve.
The Fed cut its key rate by a full percentage point – to a range between zero and 0.25%. The central bank said it would stay there until it feels confident the economy can survive a near-shutdown of activity in the United States.
U.S. crude-oil prices slide below $30 a barrel Monday, heading for a fresh four-year low with analysts expecting the coronavirus and a Saudi-Russia price war to result in a glut of fuel.
U.S. crude futures dropped 8.8% to $28.95 a barrel on the New York Mercantile Exchange, continuing a recent root that has slashed prices in half for the year as the coronavirus dents travel and fuel consumption. Brent crude, the global gauge of oil prices, fell 11% to $30.12 a barrel.
Prices of precious metals are falling on lack of investor confidence that stimulus measures taken by the world’s central banks are enough to steady the markets.
The U.S. Federal Reserve slashed rates to near zero and promised to pump $700 billion into the economy. Other central banks have made similar moves to try avoid market turmoil.
Gold has also extended last week’s losses as the price fell below $1,464 an ounce. The yellow metal has seen the biggest drop in price since 1983. Although traditionally a safe haven, investors are selling gold to cover their positions on other markets.
Prices of other precious metals are also crashing. Silver fell 14 percent to $12.61 an ounce, touching the lowest in more than a decade. Platinum plummeted as much as 26 percent to $564 an ounce, hitting the lowest since 2002. Palladium was down 10 percent to $1,626.53 an ounce, reaching the lowest since September.