US stocks fall 10%, most since 1987 Crash, despite $1.5trn Fed injection

Share prices yesterday experienced their worst rout since 1987, with even a $1.5trn injection by the US Federal Reserve unable to stem the wave of selling orders as investors rushed for the exit. On Wall Street last night SA time, the Dow Jones Industrial Average dropped 2,352 points, 10%, its worst percentage decline since the 1987 Crash.

The broader S&P500 index fell 9.5% and tech-rich Nasdaq lost 9.4%, pushing both into official bear markets. Earlier both London’s FTSE and the JSE dropped by 10%. European stocks, down 11.5%, had their worst day ever. The plunge came despite a massive cash injection announced US lunchtime by the Federal Reserve. For the second time this week, circuit breakers to temporarily halt trading were applied without much impact.

The three major US indices are down almost 15% on a week when Mr Market panicked at the disruptive impact of Coronavirus on economic activity. Although China is past the worst (President Xi visited the epicentre of Wuhan this week) big interest rate cuts by the US and UK together with President Donald Trump’s 30-day ban on European travel spooked investors.

Brent crude oil fell to $32.66 a barrel in New York last night on fears of a major global economic slowdown, dropping Sasol’s share price another 30% to a level where the company’s market cap briefly fell below the R19.5bn of adjusted EBITDA it reported for the six months to end December. Although Sasol said yesterday it is profitable at the current Rand oil price of R580 a barrel, investors honed in on a statement the company might have to issue fresh equity.

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