As the number of people infected and dead by the Corona virus continues to rise, hopes are dwindling that tight restrictions will be lifted that obligate millions of people to remain in their homes.
This adds to the uncertainty about the outlook for growth in the global economy, which is expected to enter a recession this year, as well as concern about the period that can take the economic recovery.
US President Donald Trump has announced an extended 30-day social separation and home stay until the end of the month, while members of the White House team to tackle the virus have warned that a quarter of a million Americans may die of the disease.
“The shock of declining oil demand and the effects on the wider global economy will be greater if mobility and social interaction continues beyond April,” said Stephen Ines of Execorp.
He added, “The real question for investors is not the extent of the tragic badness that the first quarter will witness. Unfortunately, this has become inevitable, but for how long the weakness will continue, and therefore how much permanent damage will result from that.”
“While the full effects of what is happening are not yet clear, it is clear that the economy has been experiencing its most severe and rapid contraction since the Great Depression,” he added.
However, some good news was received, as new data showed on Wednesday that growth had returned to the Chinese manufacturing sector. The industrial purchasing managers’ index (Shiajin) last month slightly surpassed the 50-point threshold that separates growth and contraction, after registering a record low in February.
These figures came after an official reading that exceeded expectations, which sparked hope that the second largest economy in the world is gradually returning to work after a long period of stoppage due to the Covid-19 epidemic.
However, Asian markets, after an encouraging start in early trading, closed losses. The Tokyo Stock Exchange decreased by 4.5%, and Singapore by more than 2%, while the Bombay and Seoul Stock Exchanges recorded a loss of more than 3%. The Shanghai, Taipei and Jakarta markets also closed lower.
The Hong Kong Stock Exchange lost more than 2 percent, after the giant HSBC Bank lost more than 9 percent, and Standard Chartered Bank more than 6 percent after canceling the dividend distribution and warned him of the large effects on returns.
In contrast, the Sydney Stock Exchange witnessed another strong performance, rising by 3.6 percent.
The London, Paris and Frankfurt stock exchanges recorded a decline in the first minutes of trading, following Trump’s warnings of “painful weeks ahead.”