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The Dow Jones opened with a fall amid the coronavirus outbreak. The Saudi Arabian and Russians continue with their supremacy battle on the crude oil price.
The Dow Jones Industrial Average (DJI) opened on Wednesday with a 2.40% fall as hopes of quick stimulus by the government due to the coronavirus faded. This only indicated high volatility in the future of the stock market as uncertainty caused by the increase in coronavirus cases continue spreading all over the U.S.
All other major indexes like the S&P 500 futures dropped 2.00%, the Nasdaq-100 futures were not spared as they dropped 1.83% at the time of writing. Things are not all rosy for the American federal government that is working to cushion the stock markets from an economic crisis.
The number of confirmed coronavirus cases in the U.S. surged to hit 1,000 plus as the deaths recorded rose to over 30. With state governors looking forward on a total lock-down like that experienced in Italy, the stock market will continue bleeding out.
The president of the United States announced a tax payroll cut for both employees and employers for the rest of the year, in addition, he had given a directive to release $8.3 billion to deal with the coronavirus outbreak. However, officials from the Center for Disease Control and Prevention stated earlier that they are underfinanced to properly deal with the ongoing coronavirus outbreak.
The Dow Jones had given preemptive hopes on Tuesday after it rallied high, closing the day on a high note while coronavirus is conquering new areas. With the interest rate cut, the federal government seems to be getting low on bullets to deal with the ongoing coronavirus economic effects.
This misinformation from the government has led to panic, which is putting investors away from risky assets and the stock market.
Coronavirus and Oil Price Uncertainty Affect Dow Jones and Other Indexes
Coronavirus outbreak has become a huge threat to most developed countries like the U.S. and the UK. Whereby, earlier today the Central Bank of England announced an emergency interest rate cut by half to help with the coronavirus panic and slow economic growth.
With the number of confirmed coronavirus cases seeming to slow down any time soon, the panic is causing people to stock their shelves for harder times ahead. As a result, the low demand for fuel due to lock-downs in most cities has led to oil prices crumbling, whereby, the prices have halved since the calendar flipped.
As a result, the Saudi national oil company Saudi Arabian Oil Company known as Aramco (TADAWUL: 2222) has announced that it will raise the production capacity from 12 million to 13 million barrels per day. The desperate measure by the Saudi government will negatively affect companies like solar energy and electric auto car makers, which will, in turn, see a dim future for the major stock indexes like Dow Jones.