A collapse occurred on the Asia-Pacific stock market on Tuesday, which was caused primarily by fears of market participants about the rapid increase in the number of people infected with coronavirus infection in the world. In addition, the escalating conflict situation between the United States of America and China has also had its share of pressure.
On Monday, the US State Department made a statement that it was ready to provide significant support to its partners in Southeast Asia, who took the stand of protecting their rights to use and preserve the natural resources of the South China Sea. At the same time, it is indicated that the PRC is trying in every possible way to interfere with activities aimed at this, and affirms the sole use of resources.
A response from the Chinese authorities followed immediately. The Chinese Embassy in the United States hastened to make a statement that the US authorities did not take into account the efforts of China that are being made to maintain peace and stability in the region. The message was also followed by an official protest against the words of Washington.
All this becomes evidence of the next phase of the conflict between the countries, which destabilizes the situation on stock exchanges. In addition, there are other factors that only exacerbate the situation.
So, the World Health Organization presented yesterday a report saying that most world states have chosen not quite the right tactics to combat coronavirus infection. In view of this, one can not expect that the world will return to its former life in the near future. Among other things, the report notes the fact that some countries demonstrated a very successful struggle, which nevertheless did not affect the global rapid increase in the incidence rate, breaking records almost every day.
The global trend is still extremely negative: the number of infected by the virus continues to increase. And if this problem is not taken seriously in the near future, then one can face even more serious consequences, and the economic crisis alone will not work.
Meanwhile, a large-scale economic crisis, which, according to some experts, is only gaining momentum, has not been canceled. Singapore statistics are a vivid example of this. In the second quarter of this year, the country's GDP fell by an alarming 12.6% per annum. No one expected such a fall and according to preliminary data, it should have been no more than 10%. This is taking into account the fact that Singapore was a region that did not suffer too much from coronavirus infection. However, what happened was evidence of a growing crisis, the consequences of which are still difficult to imagine and evaluate.
Japan's Nikkei 225 Index Down 0.9%
China's Shanghai Composite Index lost 2.1%. Hong Kong's Hang Seng Index also continued this trend and lost 1.8%. However, it should be noted that the level of exports and imports in the country for the first month of summer showed growth, despite the fact that experts predicted its inevitable decline. The volume of exports rose by 0.5%, while imports rushed up immediately by 2.7% on a yearly basis.
The South Korean Kospi Index fell 0.5%.
Australia's S & P / ASX 200 Index went down by 0.6%
A widespread fall in stock markets in Asia is likely to continue this week, as adequate support factors do not yet exist.
The stock markets of the United States of America also underwent a negative correction, however, it was not noted everywhere. The S&P 500 and Nasdaq indices were down, while the Dow Jones still remains in the positive zone.
The Dow Jones Industrial Average Index showed a slight increase of 0.04% or 10.50 points, which sent it to the mark of 26 085.80 points.
The Standard & Poor's 500 Index sank stronger at 0.94% or 29.82 points. Its current level at the close of yesterday's trading was in the region of 3,155.22 points.
The Nasdaq Composite Index led the decline. It immediately fell from 2.13%, which corresponds to 226.60 points. Currently, it is located at 10,390.84 points. However, it is worth noting that at the very beginning of the trading session, it still continued to grow rapidly and set new records, which by the end of the day came to naught.
The reason for the reduction in the US market was the fall in the securities of technology companies, which until that moment provided the most significant support to the main indicators. In addition, the introduction of quarantine measures on the territory of individual states also seriously frightened market participants who can no longer ignore the difficult epidemiological situation in the state. The United States of America remains the country with the largest number of cases.
The next batch of statistics, which is actively preparing for release this week, can add fuel to the fire. The season of reports has begun, and with it, a new fall may occur if the experts' forecasts come true or turn out to be too positive. Analysts advise not to expect anything good, because, most likely, the second quarter of this year will be one of the worst, which has not happened for more than ten years.
Nevertheless, investors in the markets hope that by the third quarter, companies will be able to move to growth and restore everything that they immediately lost. This may mitigate the impact that will hit the market this week.
European stock markets also began to decline rapidly. Market participants were greatly disappointed with extremely weak economic data.
The German DAX Index is down by 1.8%. The UK FTSE Index dipped 1%. French stock exchanges today rest on the occasion of the national holiday - Bastille Day.
Meanwhile, the data on the growth of the UK economy over the last month of spring were not as impressive as investors had expected. The country's economy was able to rise by only 1.8%, while the decline was much more serious. Preliminary forecasts were also better expecting a growth of at least 5.5%. Of course, such changes did not please the stock exchanges at all, which immediately affected them.
