Bears on the prowl: Unabated selloff rocks Wall Street, Gulf bourses

New York : Stocks dropped eight per cent in the first minutes of trading Monday on Wall Street and triggered another temporary halt to trading as huge swaths of the economy come closer to shutting down, from airlines to restaurants.

Emergency actions taken by the Federal Reserve late Sunday to prop up the economy and get financial markets running smoothly again may have raised fears even further, some investors said. The selling was just as aggressive in markets around the world.

European stocks and crude oil were both down close to 10 per cent. The world's brightest spot may have been Japan, where the central bank announced more stimulus for the economy, and stocks still lost 2.5 per cent.

The spreading coronavirus is causing businesses around the world to shut their doors, which is draining away revenue. That has economists slashing their expectations for upcoming months, and JPMorgan Chase says the US economy may shrink at a 2 per cent annual rate this quarter and 3 per cent in the April-through-June quarter.

To many investors, that meets the definition of a recession. Strategists at Goldman Sachs say the S&P 500 could drop as low as 2,000 in the middle of the year, which would be a 41 per cent drop from its record set just a month ago, before rallying back to 3,200 at the end of the year.

Stock markets in the energy-rich Gulf states tumbled Monday as oil prices extended losses amid unprecedented measures against the coronavirus, as Bahrain became the first Arab Gulf country to record a death from the disease.

Oil prices, the main source of Gulf revenues, skidded to their worst level since early 2016 amid a price war between Russia and Saudi Arabia, the second and third world producers. The slide was led by the UAE bourses of Abu Dhabi and Dubai which dived by 7.8 per cent and 6.2 per cent, respectively, both trading at multi-year lows.

The two bourses ignored further financial support announced Monday by some countries on top of a $27.2 billion stimulus unveiled the previous day to support the economy against the fallouts of the coronavirus. Boursa Kuwait continued to bleed with the Premier Index sliding 5.0 per cent and the All-Shares Index dropping 3.9 per cent.

Following the footsteps of the US Fed, Kuwait Central Bank cut its main discount rate by 100 basis points to 1.5 per cent, its lowest ever. The Saudi Tadawul market, the region's biggest, was trading 3.3 per cent lower despite a $13.3 billion stimulus announced the by the kingdom to support the economy.