US and global stocks in general across the board have been hit hard on Wednesday, as evidence further grows of the economic damage from the still rapidly spreading coronavirus fueling fears of a deep global recession.
Globally, more than 850,000 infections have been reported, with over 42,000 deaths, according to recent data.
Covid-19 in the U.S. is, unfortunately, developing quickly, as the epicentre. U.S. President Donald Trump did send a warning to Americans of a “painful” two weeks ahead. There are signs that the U.S. death toll could stretch into the hundreds of thousands even with strict social distancing measures.
The U.S. now has the highest number of Covid-19 cases globally at nearly 190,000, however, officials said the reported figure likely underestimates the true number of infections in the country.
Large U.S. investment bank Goldman Sachs said they are now forecasting a real GDP sequential decline of 34% in the United States this quarter, on an annualised basis, compared with an earlier estimate of a 24% drop.
Given that all still remains well within its infancy in the United States, risk-off trading will likely remain the dominant theme. Near-term rallies in the U.S. indices are going to present opportunities to be sold.
Despite all of the action that has been taken to protect the economy, both from the FOMC and the government, risks are tilted to the downside. Markets are yet to price in the full implications of this virus on the global economy.
In terms of the close of last quarter, Q1; the biggest quarterly drop for US equities was seen since the financial crisis, as a late sell-off in the final trading session brought losses to 20% since the start of the year.
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