Black Monday shakes the global economy

It has not been an easy Monday for the world's stock exchanges.

Group of people in the stock market.

The world's stock exchanges have been affected after the arrival of the coronavirus. / Photo: Pxhere

LatinAmerican Post | Laura Viviana Guevara Muñoz

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Faced with the threat of Covid-19, a virus that since December 2019 has infected more than 109,000 people, Asian stock exchanges have suffered the consequences due to fear of the spread of the virus, coupled with the thought of a possible recession.

This Monday added another factor to panic in the stock markets around the world. This is the sinking of 30 percent in the price of oil, after Russia's refusal to comply with OPEC cuts, following the Saudi Arabian initiative to “introduce an additional cut in its production in another 1.5 million barrels newspapers in response to the fall in demand for the coronavirus,” according to Expansión.

Given the refusal of the European country, Saudi Arabia decided to break with the agreement, generating not only a price war but causing one of the biggest oil price crashes since 1991.

With the above, stock markets around the world suffered a serious crash. In the Japanese economy, for example, the Tokyo stock market collapsed by 5 percent, due to concerns about the worldwide spread of the coronavirus. Meanwhile, the Chinese stock market registered a 3 percent crash.

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Latin America

As we have already indicated, the stock markets around the world had a general crash and the Latin American stock exchanges were no exception. In Chile, for example, the peso suffered a devaluation considering that the dollar in that country reached 845.70 pesos per dollar. In this way, the currency of this country achieved its historical minimum, while the dollar exceeded its historical maximum, which had occurred in November 2019 in the midst of the protests of Chileans against President Sebastián Piñera.

In a similar vein, Colombia also suffered the effects of the arrival of the Coronavirus, because on March 6 the first case was confirmed and on March 9 two more cases were confirmed, and as El Tiempo explained, “the index of the stock market, the Colcap, marked a negative variation from -7.5% to -113,970 ”.

In addition, on March 9, the dollar in that country reached 3,800 Colombian pesos, increasing its value 45 pesos more than what had been quoted last week. According to La República, “in nine weeks, the Colombian peso has depreciated 9.38% against the dollar,” and according to several experts, the price is expected to continue rising and reach the 4,000 peso barrier.

On the other hand, in Brazil, the Sao Paulo stock market had to suspend its activities due to a fall in its main indicator. When it resumed, the index was still on the negative side and there was a crash of 8.88 percent. One of the most affected, without a doubt, was the Petrobras stock, one of the main oil companies in the country, which reached a loss of 24 percent.

The situation in Mexico also did not improve, as the stock market of that country registered a fall of 4 percent, the most serious since October 2019. Also, Wall Street opened with losses, because as indicated by Semana, “the New York stock market opened with a Dow Jones drop of 5.83 percent and a Nasdaq drop of 7.12 percent. ” Due to the above, activities had to be suspended, since both fell more than the 5 percent daily limit.

The stock market in Europe

Countries like Germany, France, Spain, and Italy, one of the countries most affected by the virus after China, also opened the day with negative rates. The Ibex 35, the Spanish index, fell 7.7 percent, a figure that was not recorded since the Brexit referendum. In the other countries, “London lost 7.1%; Frankfurt, 7.3%; Paris, 7.6%; and Milan, 10.5%, ”according to El País.

The trend is expected to remain negative, due to the fear of investors in the face of Washington's measures regarding the expansion of the Coronavirus in that country. Similarly, OPEC is expected to meet again with Russia to try to curb the consequences of not accepting the deal.

If the European country does not accept, a price war would occur for a longer time, but taking into account the price reached ($ 30) it is not a profitable solution for the countries that exploit this resource. In addition, given the cheap price, the renewable energy that is used as a solution for not using oil would also be affected by such a low price.